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#12 - JRL 7020
January 16, 2003
Pay the Debt, Don't Pay the Wages

The social situation in Russia might grow even worse this year

Summing up the economic results of the last year, PRAVDA.Ru came to conclusion that the Russian government had two major goals in the economic field. The first one of those goals was to improve Russias economic image on the international scale. The second one was to pump as much money as possible from the country in order to pay the foreign debt.

Vice Prime Minister Aleksey Kudrin, who also takes the position of the Finance Minister, reported to President Vladimir Putin that the two goals had been successfully achieved. It is not known, though, what the president told Kudrin in return. There is another thing clear: Russia decided to neglect its home obligations for the sake of settling accounts with foreign creditors. This happened for the first time since the default of 1998. It deems that the debt to budget-based employees will remain unpaid this year. Most likely, it will grow instead.

First of all, Aleksey Kudrin told the happiest news to the president: the plan of the federal budget revenues was completely executed. The Revenue Ministry had a certain lack of cash, but everything was balanced with the means from other sources of income. The funds, which were supposed to be spent pursuant to the budget of the last year, have been all spent. In other words, all the funds were transferred to budget-based organizations. If someone delays salary payments somewhere, or if someone experiences a lack of money, the government (and especially the Finance Ministry) is not guilty of that. Most likely, such things happen over financial intrigues in countrys regions. In addition to that, as the finance minister pointed out, the government worked very fine in 2002, which allowed to obtain very good money in order to solve several social issues, to liquidate the consequences of the monster flood and other natural disasters. Since the government has succeeded so much, Aleksey Kudrin did not specify, that dozens (if not hundreds) of the Russian families that suffered from natural disasters in Russia in 2002 did not get the dwelling that they were promised to get.

A certain discrepancy happened with the proficit of the budget only 1.4% of the Gross Domestic Product. This is one percent as less as last year. Yet, Aleksey Kudrin did not explain such state of things with abundant surprises of nature. The minister just said that it happened over the reduction of the economic activity in the country. The profit of the enterprises allegedly dropped together with the collection of taxes.

However, the scheduled financial reserve of the country was completed more than 200 billion rubles. It goes without saying that this huge money will all be given away to Russias foreign creditors. Foreign capitalists can be happy now. They will also be happy to see President Putin in their countries during his visits abroad.

Most likely, the finance minister did not say anything about the fact that the financial reserve of the country was filled owing to governments tricks, basically. Prime Minister Mikhail Kasyanov decided that the unused money on accounts of budget-based organizations (7.2 billion rubles have been saved there as of the end of 2002) must be simply added to that reserve. The debt to budget-based employees will be paid some time later.

There is a saying in Russia: wait three years to get what you were promised. This means that salary delays will be growing by the spring of the current year. This will inevitably aggravate the tense social situation in the country. On the other hand, parliamentary elections are coming, so Vladimir Putin will have to ask very serious questions to Finance Minister Aleksey Kudrin and Social Affairs Minister Valentina Matviyenko. The two officials will have to blush and shrug their shoulders.

Kira Poznakhirko
Translated by Dmitry Sudakov

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