DON’T BE AFRAID OF INFLATION

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DON’T BE AFRAID OF INFLATION

Rossiyskaya Gazeta, April 6, 2001, p. 4

The Cabinet planned that inflation would be 12-14% in 2001. However, inflation exceeded 5% in January and February. In March inflation decreased to 1.6%. That’s why the government had to think about correcting its reference points.

Finance Minister Alexei Kudrin has made cautious statements on this topic. However, it is too early to worry about inflation. The start of the year is always marked by high inflation. Winter inflation is very high because people receive bonuses, exporters pay taxes at the end of the fiscal year, and natural monopolies charge higher fees. After that, inflation slows down thanks to seasonal factors: vacations, cheap agricultural products, and kitchen gardens. If inflation does not exceed 1% from July to September the Cabinet’s forecasts (from 12% to 14% in 2001) will hold.

Inflation usually increases in October and November. There is no sense in drawing attention to statements that the government allegedly prints too much money and the money supply is increasing at an unbelievable pace.

WILL THE GENERAL PROSECUTOR BE REPLACED?

Moskovsky Komsomolets, April 6, 2001, p. 2

Dismissals in the security bloc have got a lot of people excited. Rumors are circulating that President Putin will replace General Prosecutor Ustinov.

According to certain reports the president wants to appoint Yury Vanyushin, an investigator of the General Prosecutor’s Office, to this post. He became famous after the Gusinsky case. The General Prosecutor’s Office denies such reports saying that it is not so easy to dismiss the general prosecutor. The General Prosecutor’s Office says this is very complicated Constitutional procedure, thus hinting this process will resemble the scandal over Skuratov. In the meantime, it is most unlikely that the Federation Council will hinder the president’s decision. Currently senators state: “Don’t prevent the president from creating his team.” Ustinov became the general prosecutor thanks to this slogan despite the fact that the members of the Federation Council do not like him. That’s why it will not be too difficult to replace him.

SEGODNYA WILL PAY FOR FRIENDSHIP WITH NTV

Moskovsky Komsomolets, April 6, 2001, p. 2

Several Internet news sites have circulated reports that the newspaper Segodnya, which has been taken over by Gazprom-Media, will be shut down in mid-April – not by May 1, as planned.

The newspaper will publish its last issue on April 7. This decision has been made by the Sem Dnei publishing house, now owned by Gazprom-Media. Segodnya’s journalists link this decision with the newspaper’s stand on the NTV company. Mikhail Berger, Editor-in-Chief of the newspaper Segodnya, said he has not received any official commuication in writing on this matter.

EVERYONE WILL PAY THEIR TAXES

Izvestia, April 6, 2001, pp. 1, 2

The Cabinet thinks the bill on profit tax is the basis of the tax reform and insists on passing this document by the end of the spring session in the Duma. The Duma passed the bill in the first reading on April 6. However, the main battles still lie ahead. The Cabinet has decided to make amendments to the bill on April 5.

The Finance Ministry opposed the item in the bill which allows regions to grant tax breaks.

According to the bill the profit tax (35%) consists of three parts: 10% to the federal budget, 20% to regional budgets, and 5% to local budgets. The majority of deputies supported this idea. The Cabinet intends to make amendments to the bill by the second reading. According to Sergei Shatalov, first deputy Finance Minister, the distribution of the profit tax should be defined by the Budget Code, not the Tax Code.

In addition the bill will be aimed against off-shore companies. Currently a lot of companies are registered abroad and do not pay profit tax. The Cabinet intends to make them pay this tax in full.

WHAT WILL THE POPE BRING TO UKRAINE?

Parlamentskaya Gazeta, April 6, 2001, p. 2

The Duma is worried by the expansion of Catholicism in Russia and preparations for the Pope’s visit to Ukraine. Deputies have sent an inquiry to the Foreign Ministry. They are interested in the goal of the Russian prime minister’s meeting with the Pope in Italy. When answering this question the first deputy foreign minister stated that according to international traditions presidents and prime ministers who visit Italy must meet with the Pope.

Mikhail Kasyanov and the Pope discussed inter-church dialogue. These negotiations were based on the Constitutional principle of separation of the Church and the state.

The Russian Foreign Ministry informed the Pope about the anxiety of Russian deputies over preparations for his visit to Ukraine.

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