…WHILE UNPLEASANT FINANCIAL REALITIES UNDERMINE IT FURTHER.

Continued financial bad tidings, which threaten to undermine the draft budget’s credibility, accompany the document’s political problems. While the budget’s parameters assume a ruble-dollar exchange rate of 21.5-to-1, the exchange rate had yesterday already reached 22.4-to-1. In fact, the ruble lost 8 percent of its value against the dollar in the first ten days of the new year. Tatyana Paramonova, first deputy chairman of the Central Bank, said last week that the ruble’s value will hinge largely on whether Russia will be able to restructure billions of dollars in debts (Moscow Times, January 11). The draft budget refers to US$9.5 billion as going toward paying off Russia’s external debt, but assumes that US$4.5 billion will be provided for through loans from the International Monetary Fund (IMF) and World Bank. Last autumn, the IMF failed to disburse a US$4.3 billion tranche of its multibillion-dollar aid package to Russia. It still has not done so.

In the meantime, Russia recently failed to pay a US$362 million interest payment on its Soviet-era debt. The London Club of creditors, who holds that debt, will soon decide whether to declare Russia in default or allow the debt to be restructured (Moscow Times, January 11). In Russia, however, there is a growing assumption that a default is in the offing: Indeed, on January 9 the finance ministry felt it necessary to issue a statement denying reports in several newspapers that Russia had agreed to effectively default on its debts and give the green light for Russian property and assets abroad to be seized. The ministry pointed specifically to articles which appeared in “Moskovsky komsomolets” and “Moskovskaya pravda,” calling them an “invention from beginning to end” (Russian agencies, January 9).

PROSECUTOR GENERAL CALLS FOR SECURITY COUNCIL SESSION ON AUGUST EVENTS.