I have always maintained that a social unrest in Russia (a disaster for EMU plans to say the list is around the corner (98-99?)..
IMF praises Russia, but tycoon slams govt
03:38 p.m Jun 28, 1998 Eastern
By Gareth Jones
MOSCOW (Reuters) - The International Monetary Fund backed the Russian
government on Sunday over its refusal to devalue the ruble but said
Moscow alone could take the tough decisions needed to tackle a financial
crisis.
''The ball is now in your (Russia's) court,'' Martin Gilman, the IMF's
permanent representative in Moscow, told reporters after talks resumed
on new international credits to help restore investors' confidence in
Russia.
Moscow is seeking an estimated $10 billion to $15 billion in extra
funding, which will soon be needed to help shore up currency reserves
and meet short-term debt obligations amid a crisis of confidence on its
fledgling financial markets.
Russia's State Duma, the lower house of parliament, is set this week to
discuss a government package of anti-crisis measures, which include
painful spending cuts and tax reforms.
An influential tycoon, Boris Berezovsky, said he did not believe the
inexperienced government could get Russia out of the crisis and demanded
that all political groups, regional leaders and the media pull together
to help out.
''I think this government takes quite logical decisions but is not in a
position to carry them out,'' Berezovsky, whose influence is thought to
stretch into the Kremlin, told the TV6 television channel in an
interview.
''It is becoming clear how the solution of this crisis must be found --
through the consolidation of power ... It is a question of consolidation
of the broadest forces, including business.''
Keeping up the pressure on deputies ahead of the Duma debate, Deputy
Prime Minister Boris Nemtsov said he believed it would swiftly approve
the package.
''I am sure that the State Duma will show wisdom because we are not
talking here of support for this or that regime but of finding a way out
of the financial crisis for the whole country,'' he told Ekho Moskvy
radio.
He reiterated the determination of the government, in power for barely
two months, to resist pressure from some businessmen and economists to
devalue the ruble.
''The central bank and the government have supported the ruble and we
will support the ruble, especially if the State Duma approves the
package of laws introduced by the government.''
Nemtsov later said in a television interview Russia would soon face
payments of $60 billion to $70 billion in short-term debt obligations.
The debt payments are one of the prime causes of concern for investors
and President Boris Yeltsin, whose main achievements in six years of
wrenching market reforms -- a steady exchange rate and relatively low
inflation -- are under threat.
He and the government fear that devaluation of the rublewould mark a
return to the hyperinflation of the early 1990s, wiping out Russians'
savings and stoking social unrest.
The IMF said it backed this ''strong ruble'' policy.
''We certainly agree with the analysis of the central bank of Russia
that a devaluation of the ruble is neither appropriate nor necessary,''
Gilman said.
Chronic tax dodging has widened Russia's budgetary deficit and
exacerbated a payments crisis that results in millions of state sector
workers going months on end without pay.
Scores of miners, teachers and scientists are picketing the government's
White House headquarters in central Moscow to protest against wage
delays and to demand Yeltsin's resignation.
Alexander Lebed, a likely future contender for Russia's presidency,
issued a warning about political problems also building up in the
turbulent Caucasus region.
Lebed, a retired general who two years ago brokered a truce ending a war
in Russia's breakaway Chechnya region, said that ignoring the area would
also carry a big economic price.
''If (the tensions in the North Caucasus) blow up into full-scale
conflicts, the economy of Russia will not weather such an explosion,''
Interfax news agency quoted him as saying.
''This could lead to a devaluation of the ruble and would mean social
agitation and civil war,'' he said.
Copyright 1998 Reuters Limited. |
