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New Russian Economic Reforms Unveiled

May 25, 1994|CAREY GOLDBERG | TIMES STAFF WRITER

MOSCOW — Russia is entering a new phase in its economic reforms and will now concentrate on fighting its disastrous industrial slump and bringing order to its tax system, officials said Tuesday.

"You could call this the beginning of the stabilization period," Economics Minister Alexander N. Shokhin said, "although the statistics don't bear that out yet."

The statistics show that in Russia's stumbling transition from centrally planned socialism to a market-driven economy, it is managing to dampen inflation--the main task of recent months.

But its industry is on the verge of collapse, with production plummeting 25% in the first quarter compared to last year; its tax system is a mess, and it is desperately short of investment money. The Economics Ministry has warned that if unemployment mounts, it could lead to a "social explosion."

After months of pleas for change from factory directors and pressure from his industry-oriented prime minister, President Boris N. Yeltsin has made the troubled economy his focus in recent days.

The results appeared Monday. Six presidential decrees rolled off the presses, all of them aimed at bringing some order to the Russian economy, at introducing enough control so that, as presidential adviser Alexander Livshits put it, "there will be a little less robbery."

The decrees introduce harsh penalties for tax evaders and require factories to register all their bank accounts if they want to receive government subsidies. They also provide a whole panoply of ways of controlling factories' finances better while lifting some of the crushing tax burden from them.

"A number of measures taken by the government have allowed the economy to be stabilized to some extent," Deputy Economics Minister Sergei Vasilyev optimistically told a conference here.

One decree also sharply reduces export tariffs on oil and other goods and does away with the system of special export licenses that had provided the basis for massive red tape and bureaucratic corruption.

"The most important decree of the package is the decree on doing away with export quotas and licenses," said Mikhail Berger, economics columnist for the newspaper Izvestia, "because it will destroy the entire structure of massive bribe-taking, a structure that includes armies of corrupt officials."

Shokhin said obstacles to the export of oil and other fuel had to be lifted because the industry is on the verge of a shutdown; domestic prices have risen so much that demand for oil has dropped sharply. Export, meanwhile, was limited by licensing, so producers had nowhere to sell their oil and were beginning to stop drilling.

Still to come are promised presidential decrees on procedures for going bankrupt--Yeltsin is finally beginning to accept that monstrous loss-makers must be allowed to go under--and on limiting salaries.

Russian media largely welcomed the decrees, with the Kommersant business newspaper trumpeting that "Boris Yeltsin has once again undertaken reform."

Yeltsin enjoyed another economic victory this month when Parliament gave preliminary approval to a relatively tight budget proposed by his government for 1994.

Now he needs more success in the actual economy. According to a recent national survey, more than 80% of Russians said their salaries don't cover their expenses, and 65% said they were financially better off five years ago.

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