Figure Grossly Understated, West Maintains : Soviets to Keep Defense Budget at $32 Billion

MOSCOW — Soviet defense expenditure will be maintained at present levels in 1988, with a planned defense budget of $32 billion, Finance Minister Boris I. Gostev said on Monday.

Addressing the Supreme Soviet, the country’s nominal parliament, Gostev announced the figure without specifying its percentage of the overall 1988 state budget. The 1987 defense expenditure figure of 20.2 billion rubles ($32 billion) represented 4.6% of the announced state budget.

“Defense spending will remain at 20.2 billion rubles,” Gostev said on the first day of a Supreme Soviet session that will endorse the 1988 state budget and plan.

Officially, defense spending has remained at the same level since 1985. A 12% rise in the figure in 1984 was officially attributed to a U.S. military buildup.

Western governments regard the official Soviet figure for defense spending as grossly understated, but they study the figure for political signals on the Kremlin’s defense policy.

Economic Reform Drive

Analysts said the Soviet leadership, while maintaining defense capabilities, is seeking to develop other areas of the economy under Kremlin leader Mikhail S. Gorbachev’s reform drive.

The drive appears to be faltering in some sectors.

“Definite difficulties have arisen this year in the machine building industry,” Deputy Premier Nikolai V. Talyzin told the Supreme Soviet. “The economy is not receiving a considerable amount of the equipment it requires.”

The machine building sector is the key to retooling Soviet factories, many of which have outdated equipment, and success in the area is crucial for Gorbachev’s entire reform package.

Talyzin said that for the first nine months of 1987, the economy had grown 4.8%. For the full first two years, he said, he expected that industry will have grown 8.9% and agricultural production by about 10%.

Throughout his more than hourlong address, Talyzin stressed that intensive growth--greater labor productivity with new equipment--is required to overcome economic stagnation of the 1970s and to make Gorbachev’s reforms for a less centralized economy a success.