• ACI Russia

08/26/1998 11:37:13 Top Russian economist raps govt handling of crisis

MOSCOW, Aug 26 (Reuters) - A top Russian economist blasted

the government on Wednesday for "irresponsible actions" which he

said had led the country to the brink of economic meltdown.

Andrei Illarionov of the Institute for Economic Analysis

told a news conference that Russia's latest financial woes had

been brought on by the government's refusal to acknowledge the

severity of the problems facing it.

"I want to underline again that (the crisis) happened not

because the market functioned in this way or in that. It was

organized by the state authorities," he said.

Illarionov added that while the current problems were not

totally avoidable, their effect had been magnified by the

government's own actions such as spending billions of dollars in

hopeless attempts to stave off rouble devaluation.

He also accused leaders of spreading "open lies" about the

health of the economy in the days leading up to the start of the

rouble's freefall on August 17.

Illarionov, a respected advocate of market reforms and

long-standing critic of successive Russian governments, said a

rouble exchange rate of 12-15 to the dollar was "almost

unavoidable" and that the battered Russian currency was likely

to fall even further.

For months Illarionov was locked in a feud with the Central

Bank, arguing that rouble devaluation would prevent an

Indonesian-style crisis by bringing rouble liabilities and hard

currency reserves into equilibrium.

"Anyone who has ever opened an economics textbook knows that

this is still the only solution," he said.

"But under the current government and current policies I

don't see any light in any of this."

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