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Kremlin Could Run Out of Money on Monday

November 28, 1991

MOSCOW (AP) _ The Soviet legislature failed to approve a deficit-spending package on Thursday and State Bank officials said the Kremlin could run out of money temporarily by Monday, Soviet media reported.

It was unclear to what extent salaries and government functions would be affected, but such a financing gap appears to be the most serious crisis yet for the troubled central government.

It illustrated the uncertainty gripping the government since the coup attempt in August led to the weakening of the central government and the disintegration of Communist authority. The Kremlin has been stripped of nearly all its assets and income-producing industries by Boris Yeltsin’s Russian government.

Legislators anticipating the demise of central authority apparently just skipped Thursday’s session, preventing a quorum and blocking approval of the spending bill by the Supreme Soviet’s lower house.

The bill, proposed by President Mikhail S. Gorbachev, would have allowed the State Bank help the Finance Ministry cover its fourth-quarter budget with 90 billion rubles, according to the news agencies Tass and Interfax.

That is about $159 biliion at the highly artificial rate used to calculate government transactions. The ruble is not freely convertible.

The legislature’s upper chamber approved the package, but the lower house adjourned without mustering a quorum. The chamber wasn’t scheduled to hold another session until next Tuesday, Interfax said.

″In the opinion of State Bank representatives, this signifies that financing of current payments will stop as early as Monday,″ Interfax said.

The Soviet nightly television newscast ″TV-Inform″ reported later that the vote by the upper house was sufficient for approval of the measure, but Tass and Interfax said approval by both houses was necessary.

Legislative officials could not be reached late Thursday by The Associated Press to clarify the discrepancy.

Even if approval by only the upper house is sufficient, it is unclear to what extent the legislation would help. State Bank chairman Victor Gerashchenko earlier in the week said the the bank only had 3 billion rubles on account.

Tass said that lawmakers were ″indignant″ over their colleagues’ absence and said the legislature would anger millions of people who won’t be receiving salaries.

The government has been operating at least partially on deficit-spending since the summer, when Gorbachev permitted a 68-billion-ruble credit from the State Bank to the Finance Ministry.

Yeltsin’s government already has taken control over most of the Kremlin’s main sources of income and the State Bank, and has cut off funding to about 80 ministries. Some of the changes were to take effect Sunday.

The bill considered on Thursday would approve credit for the rest of the year. Most of the 90-billion-ruble credit for the quarter already has been spent under another Gorbachev decree, said legislator Vladimir Samarin.

Samarin, quoted by the government-run Russian Information Agency, said the interim Kremlin leadership was running its finances ″not by budgets but guesses.″

But ″one way or another, this (bill) has to be approved,″ Samarin said, according to the government-run Russian Information Agency.

Gorbachev last summer issued a decree ordering the State Bank to print extra money to help cover the Soviet budget deficit, estimated at between 150 billion and 200 billion rubles.

The legislative action came on the same day that the Soviet foreign trade bank, Vnesheconombank, which is responsible for foreign currency, turned away customers wanting cash saying it was out of money.

A bank spokesman said the refusal was due to a misunderstanding but conceded the institution was having ″difficulties with liquidity.″

-28-91 1614EST

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