ST PETERSBURG, Russia, Jun 16, 1999 --
(Reuters) Prime Minister Sergei Stepashin said
on Tuesday that Russia could become a "world
pariah" if parliament failed to approve new taxes
needed to win vital loans from the International
Monetary Fund.
But Stepashin said that if the
Communist-dominated Duma, the lower house,
adopted his government's revenue-raising
measures the IMF money could arrive next
month, averting a disastrous default on debts
already owed to the Fund.
"Our country could become a world pariah (if we
don't pass the revenue-raising laws)," Interfax
news agency quoted Stepashin as telling an
international economic forum in Russia's second
biggest city, St Petersburg.
Speaking after talks with the visiting head of the
IMF, Michel Camdessus, Stepashin said Russia
could survive without the Fund's credit but
added that this would greatly hamper the
country's efforts to stabilize it shrinking
economy.
Earlier Stepashin expressed cautious hope that
deputies would cooperate with his month-old
cabinet and approve the laws which would allow
the Fund to release $4.5 billion over 18 months.
The money would repay previous credits to the
IMF and also help Moscow to secure debt
restructuring accords with other foreign
creditors.
"If the package of documents which I spoke of is
passed, there could be a rather large IMF
tranche in July," he said.
Stepashin has threatened to call a vote of
confidence in his government if the Duma rejects
the revenue-raising measures -- a move which
could force President Boris Yeltsin to either ditch
his prime minister or dissolve the chamber.
On Thursday deputies are due to consider a
proposed levy on petrol stations, a major plank
of the IMF-sought package.
Deputies, their eyes firmly on a parliamentary
election due in December, have been reluctant
to approve a levy which they believe will drive up
petrol prices.
But in a move likely to calm their fears, more
than 50 Russian firms agreed on Wednesday to
impose price controls in key sectors of the
economy until the end of 1999, Interfax said.
The agency said the deal covered fuel and
energy, metals and transport. The companies
involved included natural gas monopoly
Gazprom, major oil companies and the railway
ministry.
Looking beyond his immediate efforts to clinch
the IMF loan, Stepashin said on Wednesday that
Russia must try to build up parts of its battered
industrial base and not rely solely on the export
of raw materials for its economic revival.
"In the recent past Russia's economy has been
oriented towards the export of raw materials but
this provides no long-term prospects," he told
reporters.
Stepashin, a former interior minister and security
chief, also signaled his intention to continue the
previous government's policy of running a tight
budget while seeking to direct more help to the
poor and to domestic industry.
Camdessus, who late on Tuesday took a cruise
along St Petersburg's picturesque canals with
Stepashin, gave no clues about fresh credits but
sounded an optimistic note about Russia's
longer-term prospects.
"There is absolutely no reason, given patience
and time, why Russia should not be able to
move to an era of hope and prosperity," he told
the economic forum, attended by Russian
businessmen and regional governors and
foreign bankers.
Before a second round of talks with Stepashin,
Camdessus also pledged continued IMF backing
for Russian market reforms.
"As far as the IMF is concerned we do want to
support the efforts of the government to
continue reforms...transparency in this country,"
Camdessus said. ((c) 1999 Reuters)