SIGNS of slippage in the Russian economy, brought on in part by infighting in the Russian government, are heightening concern among Western creditors about the future direction of President Boris Yeltsin's reform course.
``This is a crucial juncture,'' a senior United States official told reporters here yesterday. ``The crucial issue is for the Russians to undertake a program of stabilization that ensures a budget deficit and credit growth that are consistent with strongly declining inflation.''
The inability of Russia to meet targets agreed to earlier this spring for controlling inflation is threatening to block release of new loans from the International Monetary Fund (IMF) and other lending institutions, the official warned. But ``despite certain lurches,'' he added, ``the program of support could be brought back on track with certain appropriate actions by the Russians.''
Aside from curbing the budget deficit and credit growth, the senior US official mentioned other actions including the acceleration of the pace of privatization and other structural reforms and reduction of restrictions on exports.
Western concerns have risen lately with signs of growing feuding among different factions in the Russian Cabinet competing for Mr. Yeltsin's support. One group, led by Deputy Prime Minister Oleg Lobov, is seeking to substantially alter reforms, especially the privatization of state-owned factories. The other, headed by Finance Minister Boris Fyodorov and Privatization Minister Anatoly Chubais, is struggling to keep Western-oriented economic change on its current course.
Yeltsin, the ultimate arbiter of any intragovernmental dispute, has signaled that he still favors the Western faction. But his support for Mr. Fyodorov and Mr. Chubais appears to have limits.
MEANWHILE, inflation remains stubborn and the Russian ruble, which has been stable throughout the summer, shows signs of weakening again. And the parliament, the anti-Yeltsin stronghold, advocates a budget that would drastically raise the deficit to roughly 25 percent of the gross national product, something that could set off hyperinflation.
``Now we are in a precarious equilibrium and we can fall off on either side,'' former Prime Minister Yegor Gaidar told the Komsomolskaya Pravda newspaper.
Given the uncertainty, Western lenders are now reconsidering further aid to Moscow. A mission from the IMF is currently in the Russian capital to evaluate the situation. And US Undersecretary of the Treasury Lawrence Summers wrapped up a two-day visit to Moscow yesterday.
Immediately at stake for Russia is a new $1.5 billion IMF loan. The world financial organization earlier this year extended the first $1.5 billion loan to Russia. A second planned disbursement of $1.5 billion will require the Russians meeting even tougher targets than those set - but not yet met - in spring.
Publicly, Finance Minister Fyodorov is doing all he can to reassure the skeptics, saying ``there is no reason for panic.'' Speaking at a news conference last week, he predicted inflation in September would come down from August's rate, estimated at between 24-29 percent. He also said the ruble exchange rate against the dollar would remain firm.
Besides the parliament and Finance Ministry, the other major actor in economic policy is the Central Bank. While nominally subordinate to the parliament, the bank agreed last spring to a joint anti-inflation program with the government. Western observers worry that the bank's willingness to control the flow of cheap credits to state-run industry has been weakening.
``The Central Bank is for an anti-inflationary line, but at the same time there is lots of pressure from industry to save them and also there is the fact that the bank takes orders from the Supreme Soviet,'' explains Alexei Simanovsky, deputy head of the bank's Moscow branch. ``This pressure may be more forceful than the influence of the Ministry of Finance.''