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Budget in Red Ink for Last Decade, Moscow Reveals

Associated Press

Finance Minister Boris I. Gostev said today that the Soviet national budget has been in the red for the last decade, and that the deficit was “critically large” in the mid-1980s before beginning to drop.

Gostev’s revelation at a news conference came just days after the Supreme Soviet passed a $795-billion 1989 budget with a $55-billion deficit.

In presenting that budget, Gostev acknowledged for the first time that the Soviet Union had a budget deficit.

But “I’d say it’s been in existence for about 10 years,” he told reporters today. “It was extremely large, critically large, in the last years of the previous five-year plan period.”

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Gostev said the deficit then was $59 billion.

“For the first time we have clearly stated that a deficit exists,” Gostev said. “We cannot live with a budget deficit. So we’ll try to get rid of it during the year.”

He said economic managers would try to trim $40 billion from the budget, cut down on administration and get money-losing state businesses, 24,000 of which are bankrupt, to turn a profit.

Yuri D. Maslyukov, the chairman of the State Planning Committee and an alternate member of the ruling Politburo, told the news conference that the Soviet economy has an inflation rate of 0.9% to 1.5%.

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Maslyukov said wages have risen faster than labor productivity.

“We have more money than we have goods. That’s why the shelves in the stores are empty,” he said.

Showing a profit has become increasingly important as Soviet leader Mikhail S. Gorbachev pushes reforms requiring local managers to account for profits and losses.

But Maslyukov said officials were not considering eliminating government control over prices.

“If we want to maintain the low level of prices we must ensure state control. Otherwise, we are not ready for the anarchy of the market. Competition in the internal economy will be required. The basis for that is not yet ready,” Maslyukov said.


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