Officials move to calm fears of ruble devaluation
mid fears of a ruble devaluation, despite repeated assurances from the government that it would protect the currency.
President Boris Yeltsin insisted there was no economic crisis, but urged the Communist-dominated parliament to swiftly approve the government's austerity plan to nurse the ailing economy back to health.
'We have no crisis,' Yeltsin said before meeting with Prime Mini-ster Sergei Kiri-yenko to discuss economic strategies. 'I call this program stabilizing rather than anti-crisis.'
While parliament considered the austerity plan, markets and government bonds to-ok another dive.
The Russian Trading System's stock index plunged 6.1 percent at the close. Benchmark one-year government bond offered yields as high as 90 percent - up from 75 percent Friday - as nervous investors withdrew from the market amid fears of devaluation.
Central Bank chairman Sergei Dubinin sought to reassure investors that there was no threat to the Russian currency.
'There will be no devaluation of the ruble,' he said, reiterating the Kremlin stance. 'The government and central bank have enough instruments and strength to avoid devaluation.'
A devalued ruble would mean higher consumer prices, which could lead to social unrest.
Kiriyenko said he and Yeltsin discussed 'comprehensive measures that the government should take to speed up the implementation of the stabilization program,' the Interfax news agency reported.
The austerity plan focuses on Russia's complicated and outdated tax system. The new plan has won praise from the International Monetary Fund, which is considering a new loan to Russia.
Finance Minister Mikhail Zadornov said Monday's parliament session was 'constructive' with a series of key bills proposed by the government getting preliminary approval.
He said that the government and the State Duma, parliament's lower ho-use, had tentatively agreed to meet to debate the government's pa-ckage July 15-17, even though the legislature will officially be in summer recess, the ITAR-Tass news agency reported.
Failure to quickly implement the plan 'would pose a threat to state security and integrity,' Kiriyenko said after his meeting with Yeltsin.
Despite Dubinin's assurances, stability of the ruble is one of the most pressing economic problems facing Russia.
Zadornov said the government could not completely rule out a ruble devaluation if tax collection does not rise dramatically over the next three months. 'The situation is critical,' he said, according to Interfax.
'Either we collect taxes through changes in the laws, or we will be faced with completely difference scenarios,' he said.
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