• ACI Russia

08/17/1998 15:42:14 Russian MPs lash govt for financial "collapse"

By Sveta Lolayeva MOSCOW, Aug 17 (Reuters) - A host of Russian parliamentary politicians lashed out on Monday out at government policies that led to an effective rouble devaluation and what they called a financial "collapse" hurting ordinary people. "It is total bankruptcy," said Gennady Zyuganov, the leader of Russian Communist Party. "We think (devaluation) is first of all a blow to the poorest. Prices will jump higher, most banks except the biggest will collapse." Russia lifted the rouble exchange rate ceiling on Monday, a move that analysts said amounted to a de facto devaluation, in response to a crisis of confidence in the government's ability to defend the currency amid an acute economic crisis. Russia also banned foreigners from investing in certain securities and announced a 90-day moratorium on some foreign debt servicing. "The collapse has come. This will bring numerous disasters to the people," said Nikolai Ryzhkov, a Soviet-era prime minister and the head of the opposition People's Power group in the State Duma lower house of parliament. But the head of the Federation Council upper chamber, Yegor Stroyev, known for his loyalty to President Boris Yeltsin, vowed his support and called the steps "adequate and appropriate." "We will back the the measures of the government and the central bank aimed at normalising the situation including limiting speculative activities by foreigners," Stroyev was quoted as saying by Interfax news agency. Major Russian banks and top companies also said they backed the government moves. Many export-related businesses, especially oil and gas firms, are interested in a lower rouble. The Duma deputies urged quick action to avert market panic. "Big political decisions are needed first of all from President Yeltsin. Steps must be taken to avoid panic among the population and small businessmen," said Sergei Ivanenko of the liberal Yabloko faction. He said legislators had been warning about such consequences of government policy, which he described as a "pyramid scheme". The head of the Duma budget committee, Alexander Zhukov, called Monday's measures "extraordinary" and said they had to be reviewed by the Duma. "The executive and the legislative have to do everything possible to stop the panic on the financial and foreign exchange markets. Measures should be taken to help the banking system, because if it breaks down, the economy breaks down." He said the deputies were ready for constructive work and could approve some of the anti-crisis laws the government had proposed earlier. His committee would meet on Tuesday, he said. The full Duma has called a special session for Friday. Vladimir Nikitin of People's Power, the budget committee's deputy head, said the government misused billions of dollars of international loans it received last month. "We see now that the money they took in July was not enough. The money is not being used as they had promised, to be kept behind a curtain as a stabilisation fund. This shows their calculations were drawn on sand." Ultra-nationalist Vladimir Zhirinovsky said: "We expected some of our ministers would be tempted to devalue the rouble... Things must be taken calmly -- the main thing to avoid is the rouble's free fall." Former Prime Minister Viktor Chernomyrdin told Interfax urgent measures must be taken to avert a worsening of the situation now, and social unrest in the autumn. "We are all on the edge of an abyss now, and joint efforts of all branches of power are needed to keep us from falling. We cannot put on smart faces now and do petty politicking. We have to unite and work." He also called for unspecified changes in the cabinet. Yeltsin made no changes in the government line-up on Monday after meeting Prime Minister Sergei Kiriyenko, but Ekho Moskvy radio quoted sources as saying the Kremlin was seeking the resignation of the central bank chairman Sergei Dubinin. Interfax also said Yeltsin's economic aide Alexander Livshits had tendered his resignation. REUTERS

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