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Wednesday, August 5, 1998 Published at 17:00 GMT 18:00 UK

Business: The Economy

Crisis cuts Russian MP's holidays short

Prime Minister Sergei Kriryenko: Struggling against the Duma

Russia's lower house of parliament, the Duma, is to be recalled from holiday to discuss new laws aimed at combating the country's economic crisis.

BBC Correspondent Andrew Harding reports from Russia on the crisis facing Sergei Kiriyenko
The announcement followed a meeting between the Prime Minister, Sergey Kiriyenko, and the chairman of the Duma, Gennady Seleznev.

Mr Kiriyenko said the government would submit five or six new draft laws by Saturday and the Duma would meet on August 19 and 20.

The Communist-dominated lower house of parliament rejected some government plans for new tax laws before breaking for summer vacation.

IMF boost

In a move intended to bolster Mr Kiriyenko's three-month-old government, the World Bank said on Tuesday it was likely to approve a $1.5bn loan to Russia later this week.

The loan is part of an overall $22.5bn bailout package agreed by the International Monetary Fund (IMF) and Mr Kiriyenko's government last month.

International lenders are intent on keeping pressure on the government to follow through with promises that have often melted away in the past.

The package hinges on progress in implementing the socially painful anti-crisis programme.

Tax collection improving

Also on a guardedly optimistic note, the State Tax Service said it expected to collect 12.5 billion roubles ($2bn) in taxes in August, modestly up from 12 billion in July.

Russia's poor tax collection is at the centre of its non-payments crisis.

The government is struggling to service its huge debts. And a growing number of firms cannot pay the government, or each other, or their employees, many of whom have not received wages in months.

In an interview for the popular daily paper Moskovsky Komsomolets, Mr Kiriyenko, 36, drove home the message that taxes must be paid but he said they must also be reasonable.

He said: "We have to be sensible. Tax rates that are too high are pointless, because we force people to find ways to avoid them.

"And there are plenty of methods to do so. The tax rates have to be reasonable, so that it isn't worth the risk."

However he said the pressure will continue.

"I got into a fight with Gazprom," he said, referring to Russia's biggest firm and the world's largest producer of natural gas.

"The result has just come out: Gazprom has fully paid its taxes for July, and the government has fully paid up for its current use of gas."

Foreign investors are being allowed to take part in the planned sale of a 5% stake in Gazprom.

The terms of the sale will be announced by the end of the week.

Unrest over wages grows

The extra cash will be a welcome boost to the government as it struggles to pay off wage arrears to millions of increasingly impatient public sector workers.

Russian companies have lost millions of dollars in recent months because angry miners protesting against unpaid wages have imposed blockades on key railway lines, especially in Siberia.

On Wednesday a group of miners continued to block a railway line to the main power station on the Pacific island of Sakhalin despite the danger of a complete electricity shutdown.

Several hundred miners have also been picketing the government's headquarters in Moscow for nearly two months, demanding prompt payment of their wages and Yeltsin's resignation.

Russian shares slipped 3.8% on Wednesday, with the RTS index falling to 141.68 points.

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