'We will slip down into an abyss if we fail to realise that there must be a limit to the increase in the money supply and the monthly growth of inflation,' he told the mostly former Communist deputies, who reacted angrily. They had been hoping to hear of his plans for increased state spending on industry and social welfare. But young reformers in his cabinet welcomed his remarks. 'What the premier said today was extremely progressive,' said Boris Fyodorov, the Deputy Prime Minister in charge of economic strategy. 'However, only the future will show if we are capable of moving in the planned direction.'
When Mr Chernomyrdin, a former oil industry bureaucrat, was appointed in December to replace the radical Yegor Gaidar, conservatives rejoiced, believing he would, at least to some extent, turn the clock back to the certainties of central planning. Perhaps Mr Chernomyrdin was indeed inclined to do so, for one of his first promises was to support ailing industry and one of his first acts was to reintroduce price controls.
But then, it seems, the young team which Mr Chernomyrdin inherited from Mr Gaidar brought home to him the full implications of inflation which, now spiralling upwards at a rate of 50 per cent a month, is bordering on hyperinflation. Only days after issuing his decree on price control, the Prime Minister withdrew it and yesterday he explained to parliament: 'It is impossible to curtail inflation by restoring state control over prices so the government has cancelled its resolution and switched to controlling inflation.'
Mr Chernomyrdin had further bad news for deputies thinking he might stop the rouble's plunge against the dollar (yesterday it reached 572 to the dollar) by bringing back artificial exchange rates. The low status of the rouble was a 'major problem', he said, 'but we are not going to settle it using administrative methods'.
The Prime Minister did try to soften the shock for the conservatives by promising that the government would develop a social welfare programme and give selective support to vital state industries, but he added that increased taxes would have to pay for this.
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