PRESSURE BUILDS FOR OUTSIDE SUPPORT AS RUSSIAN MARKETS RESUME THEIR DOWNWARD TREND.

Russia’s stock and bond markets and the ruble’s exchange rate resumed their downward trend yesterday, despite a weekend pledge from U.S. President Bill Clinton to help the country out of its financial crisis. The index of share prices fell a further 10 percent to reach its lowest level for two years. Investors were apparently discouraged by the IMF’s continuing insistence that it will not offer an additional rescue package over and above the US$10 billion three-year loan it has already extended to Russia. In light of the government’s need to come up this week with US$1.4 billion to repay maturing debt, there was concern that the government may not be able to meet its obligations. The fall-out from Russia’s crisis has already begun to hit other emerging markets, provoking a 9 percent fall in Poland’s main share index last week. If the trend continues, the IMF is likely to come increasing political pressure to find further funding to bail Russia out. (Russian agencies, June 1; Financial Times, June 2)

Deputy Prime Minister Viktor Khristenko surprised no one yesterday when he said the financial turmoil means that the long-awaited growth in the Russian economy is unlikely to materialize this year. Khristenko repeated the government’s mantra that there are no structural causes for the crisis of confidence. He also said, however, the government is planning an emergency package of presidential decrees and government orders to be enacted in July at the latest. These will include measures to streamline bankruptcy procedures against corporate tax laggards. (Russian agencies, June 1) Prime Minister Sergei Kirienko hinted yesterday that, if the Duma drags it feet over the new tax code, the president may enact it by decree. (Financial Times, June 2) Even with the vast amounts of power that Russia’s constitution confers on the president, there is some doubt whether such a move would be legal.

GOVERNMENT REDUCES PRICE FOR ROSNEFT.