Russia Is Facing ‘Monstrous Budget Crisis,’ Yeltsin Aide Says

Russia faces such a huge financial crisis that it must throw out its federal budget in midyear and adopt a plan that drastically cuts government spending, President Boris N. Yeltsin’s top financial official said Thursday.

The nation is in “a monstrous budget crisis, the scale of which calls into question the ability of the government to perform its functions,” said First Deputy Prime Minister Anatoly B. Chubais in a speech to parliament.

Chubais, who also holds the post of finance minister, said the government was able to collect only 57% of the tax revenues expected during the first three months of the year and spent 63% of the amount budgeted for that period.

Millions of workers, soldiers and retirees have not received their pay or pensions for months, and Yeltsin has described the situation as the biggest problem facing the country.

Last month, millions of people staged a one-day national strike to protest the delay in payments, and smaller demonstrations take place daily across Russia. On Thursday, more than 100 angry teachers blocked traffic on a major highway near Volgograd in southern Russia, linking arms across the road to protest wages that have not been paid for five months.

Chubais, who held the government together as chief of staff while Yeltsin recovered from heart problems, was recently placed in charge of efforts to solve the fiscal crisis.

He told parliament the current spending plan exceeds revenues by the equivalent of more than $17 billion for the year and that Yeltsin’s Cabinet has already agreed on a plan to slash spending. The proposal must be approved by parliament before it can take effect, setting up a confrontation between Yeltsin and his foes in the Duma, the Communist-dominated lower house of parliament, who are not expected to accept a reduced budget without a fight.