Yeltsin dismisses debt negotiator Chubais as crisis deepens

PUBLISHED : Saturday, 29 August, 1998, 12:00am
UPDATED : Saturday, 29 August, 1998, 12:00am

Russian President Boris Yeltsin yesterday reportedly took the unexpected action of sacking the country's highly respected chief debt negotiator Anatoly Chubais.

As the economic crisis worsened Mr Chubais, seen as playing a key role in winning a multibillion dollar loan from the International Monetary Fund, had to leave immediately, RIA news agency reported.

Yesterday Russian shares sank to historic lows in thin, nervous trading, with the Reuters Composite of key share markets down 1.62 per cent to 51.05.

Trading in the Russian rouble against the dollar improved however, although the central bank maintained a ban in trading over the main Moscow Interbank Currency Exchange.

Average rouble-dollar rates for immediate delivery were quoted at 12.89 roubles to the US dollar.

Yesterday the world's biggest economic powers began moving to stem potentially damaging contagion from the Russian economic crisis, pledging strong support for fresh economic reforms.

As world markets began suffering more falls, United States Deputy Treasury Secretary Lawrence Summers said the US and Group of Seven industrialised nations would work 'through the financial institutions to support strong policy steps as appropriate'.

His comments came as Germany's Finance Minister Theo Waigel said his country was playing an active role in international efforts to resolve the crisis, but warned Russia must be prepared to solve its own problems.

He urged Moscow to implement key structural reforms to help boost government finances and tax revenues.

Yesterday acting Prime Minister Viktor Chernomyrdin said President Yeltsin supported an urgent programme to contain the crisis.

He had also met possible rivals for his premiership, upper house Speaker Yegor Stroyev and Moscow Mayor Yuri Luzhkov.

'We must all work in the same direction - the Duma, the government and the presidential structures,' Mr Chernomyrdin said.

'We received Boris Nikolayevich's [Yeltsin's] support for our understanding that we can get out of this situation only by combined efforts of all branches of power. Today we are not worrying about ambitions, we must stabilise the situation and end the tension, which has now reached a critical point.' He said he hoped for understanding from the financial community - particularly the banking sector, which had come under considerable pressure to sell roubles for dollars from ordinary Russian citizens.

Russia has already pledged to restructure about US$40 billion of short-term debt, but this has been dismissed by investors as too little. The International Institute of Finance estimates foreign debt and equity exposure to Russia is more than $200 billion.

Yesterday the central Bank of Russia said it submitted a law to parliament which would place Russia's largest private bank, SBS-Agro, under state control after the bank could not pay its debts or cover clients withdrawals.