There is nothing to celebrate so far. Things are getting worse,
and investors are running. Parliament is blaming the government,
not trying to push reforms through. The central bank has no funds to
defend the rouble. The September transhe of the IMF loan is not
likely to be disbursed due to the debt default. Russians have
lots of shares they got for free during "privatization".
Here are two pieces of news:
MOSCOW, Aug 21 (AFP) - The Russian parliament called Friday for
President Boris Yeltsin to resign for failing to pull the country
out of its financial crisis and caving in to pressure to devalue the
ruble.
In an emergency session convened by lawmakers seeking an
explanation for the government's handling of a four-month economic
storm, the State Duma lower house voted 245 to 32 in favor of
Yeltsin paying the ultimate penalty for Russia's economic dispair.
"A resignation of the president is not just overdue, it is 10
times overdue," declared Communist Party boss Gennady Zyuganov. "I
think it would be decent for Yeltsin and his whole circle to
resign."
Yeltsin, who chose not to attend the session and was instead
visiting a naval base near the far north city of Murmansk, brushed
aside the Duma's demands.
"It's a routine procedure," Yeltsin was quoted by ITAR-TASS as
saying. "But don't forget, there is still a president."
Under the Russian constitution, the president can simply ignore
resignation calls even if deputies vote through the resolution.
Leaders of all political stripes also urged Prime Minister
Sergei Kiriyenko to step down and hand over control of Russia's to a
coalition government that includes leftist forces.
Kiriyenko and his top aides somberly took turns at the Duma
podium to defend their efforts to plug holes in the economy, and
defied anyone else to do better.
They promised to continue acting in the interests of the Russian
people and their currency.
But lawmakers, furious that the cabinet gave up its fight to
defend a strong currency and effectively devalued the ruble last
Monday, remained skeptical that either Yeltsin or Kiriyenko's team
was on the right track.
Even former cabinet allies like Alexander Shokhin, a powerful
deputy speaker of parliament and leader of the centrist Our Home Is
Russia bloc which has hitherto backed Kiriyenko, said a change in
leadership was due.
Shokhin said he wanted Kiriyenko and Central Bank chairman
Sergei Dubinin "to present their resignations themselves."
Liberal opposition leader Grigory Yavlinsky for his part
expressed "absolute distrust" in the government and Yeltsin.
But Kiriyenko and his team held ground, saying neither they nor
the president were going anywhere until the country's economy was
pulled from its despair.
Kiriyenko, in office since March, opened his defense by quickly
warning lawmakers that there were no political forces in Russia
which could conjure a quick fix for the economy.
"We are only at the start of the financial crisis," Kiriyenko
told lawmakers. "We will have to take further difficult decisions.
"We cannot be a popular government," he said.
The premier overrode parliamentary opposition last month to
enforce a tough austerity package in a bid to ease a government
fiscal crisis which has touched off months of market turmoil.
But analysts insist a parliamentary vote in favour of the
package, which includes key tax and revenue raising reforms, would
help restore evaporating confidence. Parts of the anti-crisis plan
return to the Duma next week.
The ruble devaluation has provoked howls of protest because it
is likely to lead to higher costs on imported goods and hence
inflation, while also severely hurting the banking sector.
Dubinin insisted that defense of the sagging ruble remained a
top priority for the Russian government.
"Our priorities remain the same: the economic interests of the
country, the economic interests of the citizens of Russia, to defend
the ruble and the banking system," Dubinin said.
He conceded however that a weak ruble has already resulted in
higher cost of living expenses.
"Imported goods are more expensive today than they were at any
point over the past nine months," Dubinin told the session, adding
nonetheless that more expensive foreign products should spur on
consumption of locally produced goods.
Duma speaker Gennady Seleznyov at this stage was forced to
demand the floor to fall silent as Dubinin's words met with shouts
of protest from sceptical deputies.
Central bank has no funds to fix ruble rate: deputy chairman
MOSCOW, Aug 21 (AFP) - Russia's central bank no longer has the
reserves to fix the ruble rate and will hence let the market dictate
the currency's exchange level, deputy chairman Denis Kiselyov told
Moscow Echo radio Friday.
"The central bank has no more funds and possibilities to fix the
ruble rate," Kiselyov told the radio station. "The interbank market
determines the rate in line with market supply and demand, and as a
result we fix it as the official rate."
He said that the new widened corridor of 6.0-9.5 to the dollar
set by the bank earlier this week was given out as a general
guideline to industry for revising their budgets.
"From a long-term macroeconomic position, we had to say that the
ruble will most likely hold within these limits," Kiselyov said.
The central bank said Thursday it had spent nearly two billion
dollars defending the ruble, and that its reserves were now down to
15.1 billion dollars. The currency changed hands at 7.005 to the
dollar in interbank trade from 6.995 Thursday and 6.31 last Friday.
The government has said it views seven rubles to the dollar as a
realistic rate and central bank chairman Sergei Dubinin told
parliament Friday that defence of the sagging ruble was still a key
priority for the Russian government.
"Our priorities remain the same: the economic interests of the
country, the economic interests of the citizens of Russia, to defend
the ruble and the banking system," Dubinin said.
"If we give up on these policies, we will return to uncontrolled
monetary emissions and the hyperinflation, as in 1992-93," the
central banker added.
But the central bank has also promised to guarantee 100 percent
the savings of private citizens nervous that the de facto ruble
devaluation could start eating into their savings. Kiselyov told
Moscow Echo that total savings were more than 170 billion rubles
(24.3 billion dollars).
Dubinin said Russia was conducting talks on further bailout
loans which could be supplied using the central bank's gold reserves
as a guarantee.
He later told journalists that despite suggestions by powerful
State Duma faction leader Alexander Shokhin that he resign, "there
was no concrete proposal on this.
"I know what I must do, and the central bank will be capable of
doing the job it is there to do," Dubinin said.
The central banker added that because of the financial crisis,
there would be zero economic growth in Russia in 1998. |
