• ACI Russia

08/18/1998 11:36:46 INTERVIEW-Devaluation not enough for Russia-banker

By Mantik Kusjanto SINGAPORE, Aug 19 (Reuters) - Russia is only buying time with its de facto devaluation of the rouble and a debt moratorium, a leading Russian private banker said on Tuesday. Adalet Djabiev, president of the Forte Bank and the first Russian Islamic Badr Bank, told Reuters fundamental reform of the Russian economy was needed to avoid another devaluation in another six or 12 months. "It's a complete mismanagement of Boris Yeltsin and his economic team," Djabiev said on the sidelines of a conference on Islamic banking in Singapore. "He lost, in my opinion, control of the economy. He is not adequate to the situation. He is a problem," Djabiev said, adding that opinion was widely held. "I think he should resign with all his team." Russia announced on Monday a series of drastic measures including a de facto devaluation of the rouble and a moratorium of some foreign debt repayments for 90 days. Prime Minister Sergei Kiriyenko denied the moves amounted to a devaluation or a debt default. The government said it could no longer defend the rouble at its peg to the dollar and widened the band to between six and 9.5 roubles until the end of the year, effectively devaluing the currency by one-third from last week's level. Djabiev said another devaluation would follow if the government continued to act as though it was business as usual. "The government is taking a short breath, but not more because it's not based on economic restructuring. Russia is paying a very high price for brief happiness," he said. Djabiev said Kiriyenko did not have enough expertise to run an economy as large as Russia's. "He is without certain experience on macro-economic and micro-economic issues. He is not an economist. To run an economy you need huge experience," he said. Djabiev said Kiriyenko had only gained experience by running a small bank and had brought Russia to the brink of collapse. "Russia is losing its economic sovereignity. We cannot even maintain some very important areas of our economy such as the nuclear technology and space industry without foreign involvement and loans," he said. He said Russia was now so dependent on the International Monetary Fund that it had to follow its loan conditions on macroeconomic targets to the neglect of specific aspects of the economy. Djabiev said worse was to come unless the government revamped its industrial, macroeconomic, financial policies completely to address the inefficient economy. "It will come again. This time worse." He said the government had failed to reform the economy when it last devalued the rouble in 1994. "The government has naked monetarism, monetarism without dress. We used the monetary policy very badly," Djabiev said. He said the government failed to use policies to help competitive industries while keeping ailing companies alive. Djabiev said Russia had been on the wrong path of development since the collapse of the Soviet Union. "We couldn't find the way on how to approach the transition period. We agree that all transition periods are difficult but we shouldn't be where we are now," he said. However, Djabiev said he though civil unrest was unlikely. "In Russia we like to live peacefully. Our mentality is to be patient," he said.

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