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Thursday, December 24, 1998 Published at 12:03 GMT


Business: The Economy

Primakov threatens to quit

Life is hard for ordinary Russians

The Russian prime minister, Yevgeny Primakov, has said he will resign if parliament fails to approve his government's austerity budget for 1999.


The BBC's Allan Little reports on the proposed budget
Mr Primakov was speaking shortly before the lower house of parliament, the Duma, began debating the budget, which is aimed at restoring international confidence in the economy.

He said: "If the budget is not adopted, we will not remain.


[ image: Russia's financial markets have been thrown into turmoil]
Russia's financial markets have been thrown into turmoil
"Do you think that the country can live without a budget? Of course not. It must be adopted.

"We're not fooling anybody, the budget has to be tough."

The budget had been expected to have a smooth passage through parliament, until the powerful Communist Party leader, Gennady Zyuganov, called on Wednesday for an initial vote to be postponed until next week.

Mr Zyuganov said this would allow serious amendments to be made that took account of complaints by regional leaders over the proposed share-out of tax revenues.

Downward spiral

As the politicians continue to debate Russia remains gripped by its worst economic crisis since the Soviet collapse.

Foreign lenders froze aid to the country after the government defaulted on some debts and devalued the currency in August.


[ image: Pensioners have been hard hit by Russia' s financial crisis]
Pensioners have been hard hit by Russia' s financial crisis
Russian leaders want a budget in place as soon as possible so the government can tackle massive wage debts to state workers and kick start the economy.

The International Monetary Fund has insisted that a credible budget is a condition of any further loans.

Mr Primakov said: "When we talk about the need for passing the budget, and ask for this as quickly as possible, we are assuming this will strengthen our position in talks with international financial organisations."

Food aid

Meanwhile, the United States and Russia have signed a $625m food aid agreement after months of negotiations, clearing the way for deliveries of American food to prevent hunger among Russia's needy.

The United States will donate 1.5m metric tonnes of wheat to Russia free of charge, and provide another 1.5m tonnes of various agricultural commodities under a long-term loan.

An extra 100,000 tonnes of various foodstuffs will be distributed directly to Russia's poor.



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