• ACI Russia

08/03/1998 15:28:47 FOCUS-Yeltsin signs crisis laws, to resume holiday

By Brian Killen

MOSCOW, Aug 3 (Reuters) - President Boris Yeltsin, who last week interrupted

his summer holiday citing Russia's economic crisis, will resume his vacation on

Tuesday or Wednesday, the Kremlin press service said on Monday.

Yeltsin, who is currently staying at his Gorky-9 residence just outside

Moscow, will fly to the Valdai lakeland northwest of the capital, it said. It

gave no further details.

The Kremlin said Yeltsin had signed into law several key pieces of

legislation under the government's programme for dealing with Russia's financial


The president's decision to resume his holiday follows a cautious vote of

confidence in the measures from the deputy head of the International Monetary


IMF First Deputy Managing Director Stanley Fischer, who held talks at the

weekend with senior government and central bank officials, welcomed progress in

implementing the austerity plan but warned that complacency would jeopardise

agreed credits.

The IMF's praise for the measures taken so far failed to stem declines in

Russian stock and bond markets on Monday as sentiment was undermined by weak

international markets.

The benchmark RTS1-Interfax index of leading shares closed down 2.68 percent

at 145.64, while most treasury bill yields rose by between five and 10 percent

in thin trading.

Yeltsin's decision to leave town again suggested confidence that the crisis

was under control. But social unrest in isolated areas warmed up on Monday as

protests by unpaid miners pushed a major power station towards total shutdown

and other miners refused to end a blockade of the Trans-Siberian railway.

Yeltsin arrived back in Moscow last Wednesday, several days earlier than

planned, saying he had to prepare politically for the autumn. "I need to get

prepared and go into this period decisively without any hesitations," he said.

Russian media also partly attributed Yeltsin's early return from the Karelia

region, where he had been spending the first leg of his vacation, to poor

weather which ruined his plans to go fishing.

Yeltsin is not expected to resume work in the Kremlin until the second half

of August. The coming months are expected to be very tough as the government's

austerity measures aimed at fighting Russia's economic crisis start to bite.

Yeltsin signed some of the measures last Friday, including the core of a new

tax code aimed at simplifying the complex system and the withdrawal of subsidies

to closed cities.

The Kremlin press service said he had also signed a law changing the basis

of Russia's tax system, which includes the introduction of a sales tax of five

percent on luxury goods.

The measures are part of a funding agreement reached with international

lenders worth a total $22.6 billion that is meant to help stabilise Russia's

ailing economy.

The new credits have given the government some breathing space to implement

measures aimed at boosting tax collection and to carry out some big


The Finance Ministry said on Monday it did not plan further international

borrowing before the end of October, and the amount sought by year-end would be

no more than $2 billion.

A senior government source said a five percent stake in Russian gas monopoly

Gazprom would probably be sold in a single lot to a western investor in


"The sale is planned for September because, by all accounts, in September it

will be necessary to balance the budget," the source said.

The source added that Gazprom had paid its tax dues in full for July, with

total tax revenues from all sources reaching around 12 billion roubles ($1.9

billion) that month. "In August we must collect 13 billion roubles," he said.

The government meanwhile kept up pressure on oil companies who have failed

to make tax payments on time.

A Fuel and Energy Ministry spokesman said oil companies SIDANKO and Onako

had until August 5 to cover their debts to the budget or their access to export

pipelines will be cut.

The energy sector is worst hit by a non-payments crisis that has led to

widespread but sporadic protests over wage arrears.

Miners on the Pacific island of Sakhalin have been blocking coal deliveries

at the main power plant for 10 days, causing power cuts of up to 14 hours a day

for much of the island's 650,000 people. Officials said on Monday they were now

close to shutting the plant down altogether.

($= 6.2440 roubles)

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