The Russian government has announced sharp tax cuts in an attempt to encourage payments and boost depleted public coffers.

The Prime Minister, Yevgeny Primakov said value added tax would be cut by eight percent and profit tax by five percent.

The cuts are part of next year's budget, which has yet to be approved by parliament.

Failure to collect sufficient revenues has left a huge hole in public finances which contributed to the financial collapse in August.

Earlier this week, the IMF reiterated that it would not bail out Russia's economy unless the government reforms the financial system.