TEHRAN Putin came to power on New Year's Eve 1999 with the resignation of Boris Yeltsin, but was elected a year ago pledges to restore some of Russia's lost greatness.

He has put liberal in charge of the economy and set down a series of goals, among them trimming spending in the social and military sectors and creating a favorable investment climate.

He has made symbolic moves including laws allowing the sale of non-farm land and changed the tax code to encourage payments to state coffers.

Russia reached an unprecedented post-Soviet GDP growth rate of 7.7 percent last year. But growth has slowed, making pessimists doubt the four percent target for 2001 and foreign debt of $150 billion have created additional uncertainty.

According to an AFP report, President Vladimir Putin warned Monday that Russia had to live within its means by balancing budgets and breaking its dependence on foreign loans if the economy was ever going to get on track.

According to an AFP report, Putin delivered his stern belt-tightening message before a full meeting of Finance Ministry officials that comes amid a difficult Moscow dispute over how Russia should handle its towering mountain of debt to Western creditors.

Following through on a pro-reform state-of-nation address earlier this month, Putin said Russia must engage in serious and permanent structural reforms which can lead to economic growth that does not depend on world market prices on its energy exports. "We must end the situation in which we find now ourselves, being held hostage to our energy producers," Putin said in remarks broadcast on state television.

But delivering a barb apparently aimed at Prime Minister Mikhail Kasyanov's failure to renegotiate the schedule of Russia's Western debt payments, Putin said Moscow's current loan load was much too heavy.

"We must strive to reduce our debt, improving its structure and cutting the cost of servicing," Putin said.

He added that Russia must be "very cautious" about taking on future debts from Western creditors.

"Building up debts cannot be a part of our future strategy," he said.

On a more optimistic note, Putin said that Russian tax collection had improved drastically over the past year, in large part thanks to the government implementing a flat 13 percent income tax last year.

"Nobody expected such good results," said Putin, noting that income tax collection had picked up a massive 70 percent over the first three months of this year as compared to the same period in 2000.

For the first time in the post-Soviet era, Russia in 2000 finished the year by evening out its expenditures and revenues and has since ratified a balanced budget for 2001.

However the new budget does not include most of Moscow's Soviet-era debt servicing, a sticky issue that was rigorously discussed during Putin's meeting with German Chancellor Gerhard Schroeder.

Germany is Russia's largest foreign creditor, owed some $24 billion. Russia must pay all its foreign creditors more than $18 billion in 2003 -- an amount roughly equal to half Russia's budget receipts.