July 17, 1998
Web posted at: 2:07 p.m. EDT (1807 GMT)

• Lawmakers on holiday as economy falters
• Government gets some of what it wanted
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MOSCOW (CNN) -- After the Russian parliament rejected many of his economic austerity plans -- changes demanded by international lenders -- Prime Minister Sergei Kiriyenko said Friday that the government would act by decree to enact the proposals.

Kiriyenko's program, intended to boost the government's cash resources amid its financial crisis, included a series of bills that would bring in additional revenues of 102 billion rubles ($16.5 billion).

However, the amount approved, so far, is much less.

The State Duma

The State Duma, the lower house of parliament, has passed bills that would bring in 28 billion rubles ($4.5 billion), Kiriyenko said in a speech before lawmakers.

And of those potential revenues, the federal budget is only expected to receive 3 billion rubles ($483 million), with the rest going to local budgets, he said.

The International Monetary Fund and the World Bank have made it clear that they want the government austerity program passed before they start delivering $17.1 billion in new loans this year and next to help stabilize financial markets.

During its session on Friday, the Duma rejected several bills proposed by the government before recessing for a summer vacation that is expected to last until the end of September.

"Regrettably, we have failed to reach a comprehensive solution on how to boost revenues," Kiriyenko said in a brief speech before lawmakers. "We can't stop with that and will now have to act ourselves."

He said President Boris Yeltsin will decree some of the proposed changes turned down by the Duma; others could be enacted by the Cabinet in accordance with Russian law.

Yeltsin will use orders and presidential decrees where possible to make up gaps, Kiriyenko said. He also made a new proposal, asking the Duma to give the government the power to unilaterally change the tax rate.

The Russian stock market, which has dropped by half so far this year, shrugged off the Duma's failure to pass the package and closed Friday with a gain of 4.8 percent following steady gains all week, except Thursday.

Communists and other hard-liners dominating the Duma have balked at fiscal steps proposed by the government, saying they would worsen the nation's social woes and that new international loans would boost Russia's debt to a dangerous level.

Duma speaker Gennady Seleznyov said the house might hold an emergency session next month to discuss government proposals that have not been enacted.

Among measures passed by the Duma on Thursday, and approved Friday by parliament's upper house, or Federation Council, were:

• An additional 5 percent sales tax on some goods.
• A government monopoly on alcohol production.
• A cut in the oil excise tax.

To show his gratitude, Kiriyenko on Friday had flowers presented to women lawmakers in the Duma, but had nothing for the men.

Asked by reporters whether male Duma members would also receive a gift for their labors, Kiriyenko joked: "We thought long and hard in the government, but could not think of any present for the men which would not look like a bribe."