Publication: Prism Volume: 4 Issue: 14

Russia’s financial crisis deepened despite the government’s increasingly desperate efforts to find a way out. Prime Minister Sergei Kirienko on July 1 presented the Duma with twenty-one legislative proposals constituting an “anti-crisis” program of austerity measures. The Duma gave its preliminary approval to twelve of the bills and undertook to consider the rest, plus the new Tax Code, before breaking for its summer recess on July 16. The consensus was that the Duma would likely approve the bulk of the government’s proposals.

Meanwhile, the Russian government, the IMF and the World Bank reached provisional agreement on a new, $15 billion aid package to bolster the beleaguered ruble. This would be a “dormant” loan — one that would not be spent but would instead sustain the ruble’s exchange rate vis-a-vis the dollar. Chief Russian negotiator Anatoly Chubais said he expected the deal to be finalized shortly. The IMF was understood to be trying to make the new loan conditional on further structural reforms to the Russian economy. Chubais said the loan was “very important” for Russia, but that “we need to make our own efforts, without which the crisis cannot be overcome.” The Duma’s Communist speaker, Gennady Seleznev, insisted that parliament would still have to approve any new loan that exceeded the target for foreign borrowing envisioned in the 1998 federal budget. But most observers predicted that the Duma’s agreement would eventually be forthcoming.