Dynamics of GDP and the populace’s living standards 19
Structure of balance sheets of banks with the government participation in their capital as of April 1, 2000 21
Foreign trade 23
Forecast of international oil prices 26
The economy and politics in May 2000
The first month of Mr. Putin in the office has already been signified with a number of transformations that may have a real impact on the country’s development, both in the short- and long run. Along with the announcement of anew economic program and formation of the new Cabinet, the political and economic intrigue of the month became focused on problems of reforming the federative composition of the country.
The thorough analysis of the process of the formation of the new cabinet allows several remarks.
First, despite of the absence of a program of actions, the number of votes in support to the new Premier once again has demonstrated the level of the Kremlin’s influence on the new State Duma.
Secondly, with a clearly liberal nature of the program developed by Mr. Gref’s Center for Strategic Research and the first steps the newly formed government undertook in the economic field ( legislative initiatives aimed at lowering the tax burden) in place, unfortunately, there are certain grounds to doubt that the new tem is ready to undertake practical measures on structural transformation of the economy in the short run and to develop the development strategy in the long run. Such doubts are caused by some vagueness of the economic block, both from the viewpoint of the government’s structure and assuming ideological preferences of heads of main ministries and departments of this block.
Meanwhile, the April data on the cease of the industrial growth, problematic nature of the further latent subsidizing of the economy through the lowering of tariffs for energy sources, the long- lasting fall in the quotations in the Russian securities market,- all the above once again proves the thesis about the urgency of the radical structural transformation.
In the meantime, with all their revolutionary nature and complexity, the President’s initiatives on strengthening the vertical of power ( creation of the federal Okrugs, the envisaged change in the principle of formation of the Federation Council, the possibility of the dismissal of the elected head of regions (as well as municipalities) should they violate the Constitution) raise more questions than comments, and the tactical and strategic goals of the process have not been formulated as well.
Obviously the current situation, in which the legislation of the overwhelming majority of the regions (especially national autonomies) to some extent contradicts the Constitution, is the result of a long period of the political impotence of the central executive power. It is also obvious that today the federal center has political resources sufficient for conducting transformations aimed at the creation of a single legal space. The lowering of the governors’ status to the role of the “regional manager” who, in addition, does not enjoy the right for immunity, creates broad opportunity for the strengthening of the control ( primarily the financial) over the legal authorities’ activities, and, consequently, that creates real grounds for introducing a transparent budget federalism system. Finally, the permanent presence of the federal center’s representatives in the regions and regional representatives in Moscow, is likely to allow some improvement of the quality of management of the national economy.
Hence, one the one hand the implementation of the planned transformations potentially should help enhance the transparency of financial flows and efficiency of the functioning of the state economic system as a whole. On the other hand, however, the absolutely crucial matter of the circle of obligations and powers of the federal representatives remains unresolved.
State of the federal budget
The data on the execution of the federal budget in between January through March 2000 are represented in table 1. The deflation of indices was made using CPI. As the Table shows, the level of tax revenues and the general level of revenues in real terms are substantially, more than 2 times, superior to the respective index of 1999.That became possible, apart from the growth in tax revenues from large taxpayers, thanks to the renewal of the growth in world prices for export commodities.
The monthly execution of the federal budget of the Russian Federation ( in prices of January 1998)
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