Rouble firms as Yeltsin chooses Primakov as PM

PUBLISHED : Saturday, 12 September, 1998, 12:00am
UPDATED : Saturday, 12 September, 1998, 12:00am

The Russian rouble continued to firm yesterday, following the decision by President Boris Yeltsin to nominate former foreign minister Yevgeny Primakov as prime minister.

Russia's lower house of parliament later approved Mr Primakov as prime minister to pull the country out of economic crisis, ending nearly three weeks of political deadlock.

Having been set yesterday by the central bank at 12.8749 to the United States dollar, early trade on the electronic Selt system of the Moscow Interbank Currency Exchange indicated the rouble up at 10.6 for settlement on the day.

Shares on the main RTS Index fell a further 3.54 per cent during the day, although the central bank set its official rouble rate at a firmer 11.4281 for the weekend.

The Duma also approved Viktor Gerashchenko as Russia's new central bank chairman, following the decision by Sergei Dubinin to resign this week.

In a separate address to the Duma Mr Yeltsin said he was confident that Mr Primakov could solve Russia's economic problems.

'The tasks facing the government are difficult - to get prices down, to return goods to the shelves, restore the banking system and guarantee deposits,' he said.

'It will not be easy but I am sure it will be done because the government headed by Yevgeny Maximovich Primakov will have the support of the president and the support of the Federal Assembly.' However, analysts warned that Russia still faced significant problems, and new revelations emerged yesterday that it had missed part of an interest payment to Germany and other countries on debt from the public-sector Paris Club.

Recent turbulence on the Russian foreign exchange market had prevented orderly sales of export revenues, and was compounded by the inability of the heavily indebted banking system to guarantee payments, an official said.

'Russia is honouring all debts on agreements and contracts signed after January 1, 1992, on due dates,' said deputy finance minister Mikhail Kasyanov.

'There are no arrears at all,' he said.

'Nevertheless, there are delays on interest payments in the framework of a memorandum of understanding signed with the Paris Club on former Soviet Union foreign debt restructuring.' It emerged that almost an entire 800 million deutschemark (about HK$3.66 billion) interest payment, due on August 20, had been left unpaid, and that only 48.5 million marks had been sent.

Under the Paris Club deal, Moscow has agreed to pay about 1.6 billion marks to sovereign creditors, but German finance and economic ministry officials said they were still confident that Russia would honour its debts.

'We are in close contact with the Russians concerning the remaining payments,' a German economics ministry spokesman said.

'They have clearly said they would fulfil their obligations, and we have no reason to doubt that.'