Publication: Monitor Volume: 4 Issue: 125

Russia’s bond and equity markets continued their downward plunge yesterday as President Boris Yeltsin called on the State Duma to approve without delay the government’s package of tax-raising laws. Although Yeltsin said it was inaccurate to call the measures an “anti-crisis” program “because we have no crisis,” tycoon and politician Boris Berezovsky told journalists that the government had a maximum of three weeks to find a way out of the present crisis. Finance Minister Mikhail Zadornov added fuel to the fire by telling the Duma’s Budget Committee that the ruble may have to be devalued if tax collection does not increase by at least one-third in the next few months. Zadornov said the Duma must end its “populist stunts” and approve the government’s program. Otherwise, he said, a forced devaluation would be inevitable, meaning a sharp increase in inflation that would hit the man and woman in the street hardest of all. Devaluation would also, Zadornov warned, be disastrous for many of Russia’s 1,500 banks, fewer than thirty of which would be likely to survive. (Itar-Tass, June 29)

Zadornov was immediately contradicted by Central Bank chairman Sergei Dubinin, who said that the government and the Central Bank have enough gold and currency reserves to avoid devaluation. “There will be no devaluation,” Dubinin insisted. (ORT, June 29)