Yeltsin crisis plan wins support
Russian President Boris Yeltsin won support from influential Russian tycoons yesterday and announced he would present an anti-crisis plan at the end of the month to shore up the economy.
Following close discussions with business leaders and bankers in the wake of domestic market turmoil on Monday, the Kremlin said it was taking urgent action to contain any further adverse effects of the crisis.
The plan will be presented to parliament at the end of the month, and Kremlin spokesman Sergei Yastrzhembsky said all the country's business magnates backed the plan.
'What is noteworthy is that everyone spoke of the necessity to act together,' he said.
'I believe in the next few days, before the end of this week, we will get confirmation of this new position of the Russian financial and business community.' Russian stocks skyrocketed 12 per cent yesterday, more than recouping the previous day's losses on optimism that Group of Eight states were piecing together an emergency package to prop up the ailing rouble.
Shares on the main RTS trading system closed at 192.75, up 12.25 per cent on the new two-year low set on Monday, as traders hungry for good news feasted on upbeat signals from the United States about talks on an aid package for Russia.
The Russian central bank was forced last week to hoist interest rates 150 per cent to try and ease the market anxiety and defend the rouble, which had come under significant pressure.
The government has put in place an austerity plan, cutting state spending and raising budget revenues by improving tax collection, but there is increasing recognition that more far-reaching measures are needed.
Yields on long-term treasury bills also fell to 65-69 per cent from 73-74 per cent on Monday, as strong buying emerged.
'I clearly saw a joint position not to limit efforts to fiscal measures,' Mr Yastrzhembsky said of the meeting between Mr Yeltsin and the businessmen.
'The main efforts will be aimed at reviving industry, kick-starting production.' The measures are being kept confidential until they can be properly hammered out, but they are expected to include a more wholesale reform of the ailing tax system, moves to solve the crippling non-payment problems, and the question of tariffs on gas, electricity and railways.
Leaders from all over the world are becoming very concerned that the crisis within the country, a nuclear power, could spiral out of control and lead to Mr Yeltsin's removal.