Newspaper article The Christian Science Monitor

Russia Acts against Inflation, Shifting from Industry Focus

Newspaper article The Christian Science Monitor

Russia Acts against Inflation, Shifting from Industry Focus

Article excerpt

THE Russian government is taking emergency measures to stave off hyperinflation, but its chances for success are threatened by deep policy differences among the Cabinet, the Central Bank, and parliament.

Combating inflation has become the government's top priority, Deputy Prime Minister Boris Fyodorov said at a news conference Wednesday, adding that tight fiscal policies are planned to cut the money supply.

The announcement signals a major shift for the government of Prime Minister Viktor Chernomyrdin. Since becoming premier in December, Mr. Chernomyrdin often said the government's top priority was stopping the fall in industrial production. The collapse of industry was the primary reason for Yegor Gaidar's replacement by Chernomyrdin, who takes a go-slow approach toward reforms.

But if loose monetary policy is not immediately reversed, the nation is headed for catastrophe, Privatization Minister Anatoly Chubais says. He estimates inflation, which was 25 to 27 percent in December, at 50 to 60 percent this month - a level of hyperinflation that he says will prompt capital flight.

There are several large obstacles Mr. Fyodorov - who is in charge of economic reform - will have to overcome if he is to implement tight monetary policies, some Russian economists say.

Officials, such as First Deputy Prime Minister Vladimir Shumeiko, have played down Cabinet rifts between pro-Gaidar radical reformers and the cautious allies of Chernomyrdin. At a recent press luncheon Mr. Shumeiko insisted the Cabinet is working together, saying the ministers all support the move to a market economy.

But Fyodorov confirms sharp differences among ministers over reform tactics, saying the tight money policy was approved following a "heated discussion" during a Cabinet meeting. Another sign of discord within the Cabinet was the decision earlier this week to lift price controls, implemented by Chernomyrdin on Jan. …

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