Russia Stalls on Debt Repayment Terms
The Russian government, under fire at home for devaluing its troubled currency, delayed announcing terms for repaying its ruble debt after the world financial community raised concerns that the plan would discriminate against foreign creditors.
Meanwhile, the slide in Russia’s currency slowed somewhat since President Boris N. Yeltsin devalued the ruble Monday--and announced plans to restructure short-term domestic debt by swapping it for longer-maturity paper--in an effort to avoid economic collapse. But the Russian stock market continued to get pummeled, falling to a 27-month low.
Newly appointed Deputy Prime Minister Boris Fedorov said the government needs five extra days, until Monday, to unveil its final plan for restructuring its debt to avoid “mistakes or uncertainties.”
“On Monday, it will be totally ready, this I promise,” Fedorov said. “If there is no announcement, I will no longer be here” in government.
Credit Suisse First Boston, whose clients account for 40% of foreign holders of ruble debt, earlier Wednesday accused the government of planning to give the foreign investors “who have helped finance the Russian reform over the past few years” about a third of what Russian bondholders would get in the debt-swap scheme. This, the bank said, was “massive discrimination against foreign investors.”
On Wednesday, the ruble’s official value fell slightly, to 6.890 to the dollar on the Moscow Interbank Currency Exchange, from 6.889 on Tuesday. At currency exchange offices on streets throughout Moscow--a more sensitive barometer of popular expectations--the ruble is trading at lower rates of 8 to 10 to the dollar.
While the government and Yeltsin himself remain hopelessly unpopular, the general public is surprisingly impassive about the latest of many financial crises they have suffered under their post-Soviet president. Yeltsin’s announcement only last Friday that there would be no devaluation--and his decision to stay on vacation since--has drawn mockery from his subjects.
One cartoon in the Moscow Times newspaper gleefully compared the embarrassing predicaments of Presidents Clinton and Yeltsin, showing Clinton saying, “I didn’t lie about Monica, I just didn’t volunteer information,” and Yeltsin saying, “I didn’t lie about the ruble, I just didn’t have any idea what I was talking about.”
But although most people have looked at the sharply lower exchange rates posted at currency offices with dismay, there have been few moments of panic.
“I don’t really understand what all this is about,” former teacher Tanya Samsonova said with a shrug. “I don’t understand words like ‘devaluation.’ For the moment, I’m fine. I’d never dream of putting my money in a bank, or my savings in rubles. I keep dollars in a stocking at home, so it’s safe.”
