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Tuesday, Sep. 22, 1998
Russia prints money, extends credits
Central bank issues $55 million in rubles to prevent economic collapse
By JOHN IAMS
Associated PressMOSCOW - In a bid to prevent the collapse of the country's commercial banks, Russia's central bank has begun printing money, issuing 900 million new rubles, worth about $55 million.
President Boris Yeltsin met with Prime Minister Yevgeny Primakov Monday to complete Cabinet selections and formulate a strategy to jump-start the country's moribund economy.
The financial crisis has caused a backlog of bank payments totaling more than 30 billion rubles ($1.9 billion), Andrei Kozlov, the first deputy chairman of the Central Bank, told a news conference.
The bank launched an emergency rescue plan on Friday to help settle $613 million of the payments, or one-third of the total owed between banks and their clients.
As part of the effort, the central bank printed 900 million rubles and issued short-term credits to banks. Kozlov stressed that the amount was too small to affect the ruble's exchange rate or inflation.
But many analysts feared that the move may set a dangerous precedent, and if such a policy is continued, it could fuel inflation and lead to further declines in the Russian ruble, officially valued at 16 to the U.S. dollar, down from slightly over six when the crisis began a month ago.
Critics have accused the government of responding too slowly to the economic crisis, which hit last month. The rescue plan for the banks represents the biggest emergency effort so far.
Primakov has been in office 10 days, but has yet to outline an overall economic strategy or put his cabinet in place. Key jobs, such as the finance minister's post, have not been filled.
``We are going to finalize the personnel issue with (Primakov) today,'' Yeltsin said at the start of his meeting with the premier, but no new Cabinet appointees had been announced by Monday night.
Deputy Prime Minister Alexander Shokhin, after meeting with Yeltsin, said the government's plan would be unveiled on Wednesday. He said it was particularly important for the government to set out a schedule of when it intends to repay wage and pension arrears, and aggressively increase tax revenues.
In other economic developments:
The ruble closed unchanged at 16.3 to the U.S. dollar after the central bank canceled electronic currency trading on the interbank exchange. The bank said it needed more time to determine which banks should be allowed to participate on the currency markets.
Russian stocks lost ground in sparse activity. The Russian Trading System Index fell 4.6 percent to close at 47.81, down from 50.12 points Friday. It was the first time the index closed below 50 points.
Primakov also named Shokhin, considered a moderate reformer, to head Russia's delegation in talks with the International Monetary Fund. An IMF mission is in Moscow for talks with Russian officials to follow up on Russia'slending program. The IMF organized a $22.6 billion rescue package in July, but it did not ward off the crisis.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web