Russian prime minister Yevgeny Primakov defended the measures, which he hopes will haul Russia out of financial crisis. He denied they were a rejection of market economy, but said the depth of the country's troubles meant more state intervention was needed.

"Especially when one is coming out a crisis situation, it is necessary to take all the measures for regulation, there is an especial need to strengthen the regulatory role of the state," Primakov told a news conference.

Russia vitally needs IMF credits, but a mission from the Fund left Moscow on Friday after 10 days of fruitless talks without approving the release of $4.3 billion promised in June to the previous government. The news agency Interfax quoted a government expert as saying the IMF had criticised the economic plan as a "significant step backwards in forming a marketeconomy".

The IMF experts were against increased state intervention, wanted a reduction of government spending, and saw plans to rescue many failing banks as unrealistic, Interfax said.

Primakov said IMF credits were not necessary to carry out the plan but that he was still counting on help from the Fund. Russia faces $17 billion in external debt repayments next year and is still struggling to work out how to repay billions of dollars of domestic debt.

The IMF said talks could resume if there was a "programme which could be supported by the international community" and that the government needed to draw up a "realistic" 1999 budget.

"While there was a common view on the desirable objectives for economic policy through the end of next year, the necessary policy measures are still under consideration," the Fund said.

Primakov argued that many countries, including the US and Germany, had gone through a stage when the state took a strong hand in order better to form an economy run along marketlines.

"The role of the state, especially in such a serious period as that which Russia is going through, consists of bringing about economic order," Primakov said.