Russian Officials Insist Economy Is Stabilizing : Summit: Group of Seven financial leaders are skeptical. But they’re optimistic about Europe.

Meeting with financial leaders from the world’s biggest industrial democracies, Russia’s economic policy-makers Saturday insisted that they are committed to reforms and have policies that can stabilize the country’s runaway inflation.

However, the finance ministers and central bankers from the so-called Group of Seven who heard the Russians’ presentation voiced skepticism that the ambitious goals can be met.

Earlier in the day, the G-7 ministers gave a cautiously optimistic projection that Europe may soon follow the United States out of one of the worst recessions since World War II.

Also, at a separate, bilateral meeting, U.S. Treasury Secretary Lloyd Bentsen and Japanese Finance Minister Hirohisa Fujii talked for about an hour but failed to make any headway in resolving the issues that have led to a major trade dispute between their two nations.

But the main focus of Saturday’s G-7 meeting was on the Russian reform process and the obstacles that threaten it in the wake of last December’s parliamentary elections--elections that saw proponents of a free-market economy trounced by ultranationalists and former Communists.

In a narrow sense, Saturday’s meeting was about world lending agencies releasing more of the $44-billion Russian aid package approved by the Group of Seven heads of government last year in Tokyo. That assistance is linked to progress both in reforming Russia’s huge, obsolete, state-owned industrial sector and in stabilizing key economic factors such as dangerously high inflation and growing budget deficits.

In the larger context, the very future of Russia itself and, with it, the stability and security of the West depend in part on the ability of the major industrial democracies and key international lending institutions to work with Moscow to nurture reform yet avoid political explosion.

During a two-hour meeting held at a large villa in the Taunus Mountains north of Frankfurt, the three key figures in control of Russia’s economic future--Finance Minister Sergei Dubinin, Deputy Prime Minister Alexander N. Shokhin and the chairman of the Russian Central Bank, Viktor V. Gerashchenko--told the G-7 ministers and central bankers that the present government will be able to limit the federal budget deficit to 5% of gross domestic product this year and cut inflation from the present rate of about 23% a month to less than 10%.

“We’re sure that by the end of the year, inflation will be below 10% per month (and) a more realistic figure would be 7% to 9%,” Dubinin told reporters after the meeting.

He and Shokhin did, however, refer to “a difficult political situation” in Moscow.

With many of Russia’s radical reformers swept from power, some respected Western economists have predicted just the opposite--a slide into hyper-inflation as the pressure for change stalls.

While the G-7 representatives urged the Russians to press forward with reforms launched prior to last December’s parliamentary elections, they were clearly unconvinced by the assurances they received Saturday.

“I think, considering where they are now, that’s an ambitious goal,” Bentsen said after the meeting, shaking his head skeptically as he spoke. “They’ve got some tough judgments to arrive at.”

German Bundesbank Chairman Hans Tietmeyer said he was encouraged by the presentation but remained unsure if the goals can be met.

“We got the impression they are trying, but the question is if the political structures will allow them to succeed,” he said.

In a formal statement, the G-7 representatives also:

* Tried to nudge the International Monetary Fund and the Russian government to work more closely to improve the flow of aid.

Harvard University economist Jeffrey Sachs, who played an important role in formulating initial post-Communist economic reforms in Poland, said recently that of the $17 billion in loans pledged to Russia last year via the International Monetary Fund and the World Bank, only $2 billion had been dispensed.

“The IMF failed miserably in advising the Group of Seven countries and the Yeltsin administration on Russia’s financial reconstruction,” Sachs wrote last month in the New York Times.

* Agreed to support a new, substantial debt-rescheduling agreement for Russia but emphasized the need for Moscow to meet all remaining debt obligations.

* Noted that enhanced trade access for Russian manufactured goods abroad is an essential part of the G-7’s reform strategy.

Earlier this month, Shokhin accused the West of building what he called a new Iron Curtain around Russia by refusing to purchase Russian goods.

The G-7 ministers were also cautiously upbeat about the global economy, indicating that one of the worst recessions since World War II has most likely reached its ebb.

“There was overall agreement that the worst of the recession . . . is now over and that in some areas, recovery is under way,” commented German Finance Ministry spokesman Christian Kastrop.

The assessment was based largely on renewed growth in the United States, hopes for a Japanese stimulus package and German government estimates that the downturn in Europe’s largest, bellwether economy has ended.

German Finance Minister Theo Waigel told the meeting that the German economy will return to growth this year, with unemployment peaking at its present postwar high of just over 4 million and total gross domestic product expected to rise by as much as 1.5%.

At the same time, he said, Germany’s inflation rate will most likely drop from its present 3.4% level to below 3% by the end of the year.

While some independent analysts have accused the German government of overly optimistic forecasts to boost its image in a crucial election year, Waigel strenuously defended his projections.

The IMF also urged Japan, in the throes of its own deep recession, to extend a $145-billion fiscal stimulus package beyond the present year and pressed Tokyo to open its domestic markets more to foreign goods.

A senior U.S. Treasury Department official said nothing resembling a breakthrough came during the hourlong Bentsen-Fujii meeting.

He said Japan “gave no indication” that it is ready to move on its trade impasse with the United States.

That dispute is fueled largely by the continued difficulties encountered by American companies trying to penetrate Japanese markets and by a U.S. trade deficit with Japan that last year hit $60 billion.