RYZHKOV CALLS FOR SOVIET ECONOMIC REFORMS
Soviet Prime Minister Nikolai Ryzhkov
described the Soviet Union's economic management system as
obsolete and called on the Supreme Soviet, the nominal
parliament, to adopt a draft law on major economic reform.
    In a speech to the 1,500 member body, Ryzhkov said
excessive central control by Moscow-based ministries and
wasteful use of resources had led to a situation where 13 pct
of Soviet industrial enterprises were making a loss in 1986.
    He said the public faced acute food and housing problems
and a "shadow economy" was growing because the state could not
meet demand.
    He added that the USSR had failed to keep up with the
technology revolution.
    "The methods of the past system of economic management have
become obsolete," Ryzhkov declared. "The need for change is
evident and urgent."
    Kremlin leader Mikhail Gorbachev, who set the tone last
week with a frank speech on the economy, was present during the
speech.
    The legislation outlined by Ryzhkov, formally called the
draft law on state enterprises, is expected to be approved by
the Supreme Soviet, to take effect next January 1.
    Under the law, all enterprises are to become financially
self-supporting by taking charge of income and outlay, with
wages tied to profit in order to increase worker incentive.
    Firms will compete for orders from the state, which are due
to decline as direct contracts between enterprises expand.
    Ryzhkov said the state planning agency, Gosplan, would be
restructured to set national economic priorities instead of
administering factories directly through five year plans.
    "We need a fundamentally new approach to yearly planning," he
added, saying annual central plans would be abandoned from 1991
and enterprises charged with developing their own plans.

    He said scientific research should be integrated closely
with industry to make up a technology gap with the West and
enterprises should use market research to meet consumer demand.
    Ryzhkov blamed the state supply body, Gossnab, for allowing
shortages to occur. He said Gossnab was hoarding 27 billion
roubles worth of raw materials and semi-finished products of
enterprises. He said Gossnab should help expand wholesale
trade.
    Ryzhkov said improved economic management of consumer goods
and services was required to stem increasing speculation and
the growth of the black market economy. He called for a 10 fold
increase in the number of cooperatives to help in this field.
    He said the price system needed radical revision to
accurately reflect supply and demand, with the state setting
prices only for "products of national importance" in changes to
be fully in place by the next five year plan beginning in 1991.
    The practice of using credit to cover losses must also
stop. Outstanding debts to the state had reached 40 billion
roubles.
    He said there were proposals to replace the "cumbersome"
banking system with six new banks -- a state bank and banks for
foreign economic relations, agro-industry, construction,
housing and commercial services, and credit.
    Ryzhkov said guarantees should be built into the law to
prevent "the distortion of the rights of enterprises." But
non-profitable enterprises would be declared bankrupt if
efforts to make them self-supporting failed.
    Bemoaning the "economic illiteracy" of many managers, he
called for the retraining of economic personnel.
    Ryzhkov said an immense amount of work lay ahead and "doing
it on the go" would be difficult, but added, "We do not have time
to stop and ponder."
    He said the changes should "give a new image to socialism."
 REUTER
