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Thursday, May 13, 1999 Published at 16:50 GMT 17:50 UK


Business: The Economy

Rouble trouble rumbles on

Acting PM Sergei Stepashin shows the president the way ahead

The Russian rouble slipped further on the world's currency markets as politicians in Moscow began debating if President Boris Yeltsin should be impeached.

London FTSE 100
UK share prices
Dow Jones
World markets
Foreign exchange
Only 24 hours ago, and minutes before President Yeltsin removed Prime Minister Yevgeny Primakov and his cabinet from office, the rouble had been valued at around 24 to one US dollar.

But after Wednesday's mass sacking, it is now trading at about 26 roubles to $1.

Investors were already nervous about the Russian economy, reflected in the rouble's international standing.

In the past few weeks, it has hit record lows against the dollar.

The currency could be even more of a no-go area now.

Currency analyst at Barclays Capital, in London, Jake Moore, said: "Until we see some stabilisation in the politics in Russia, investors are going to be wary."

Russian roulette


[ image: Actin PM Sergei Stepashin: Things can only get better?]
Actin PM Sergei Stepashin: Things can only get better?
Indeed, they might be. The International Monetary Fund has been called in to prop up Russia's ailing economy.

But it is holding back on handing over any more money until important economic reforms are pushed through.

Last month, the IMF tentatively offered Russia a loan, but said parliament must approve a raft of economic reform measures and the government must make structural adjustments.

Where all this stands, given the latest political turmoil, is not clear.

Shares grief

Having plummeted 16% on Wednesday, Russian share prices bounced back by nearly 3%.

Volume on the main over-the-counter market, the Russian Trading System, was just $7.07m on Thursday after $17.8m the day before and was mostly the result of activity among Russian operators.

The RTS1-Interfax share index finished 2.69% higher at 83.58.


[ image: Little has changed for Russian shoppers under Mr Primakov]
Little has changed for Russian shoppers under Mr Primakov
The market had hit a nine-month high last week in a rally triggered by strong oil prices and promises of new international lending.

The Russian cloud lifted from other share markets too. Although most European bourses were closed for a holiday, London was up 113.5 points at the close reaching 6456.6.

'Can't get worse'

"It is difficult to get worse," said Pavel Teplukhin, president of asset management at Moscow brokerage Troika Dialog.

"The economy is in a state of depression at the moment and the state of depression will continue, whatever is the government," he said.

Russia's economy improved under Mr Primakov with signs of industrial growth, rising foreign reserves crucial for repaying foreign debt, and markets recovering from crisis lows.

But many economists say improvements beyond pre-August crisis levels will not happen without real reform.

No reforms, no growth

A main concern has been Russia's inability to get to grips with its debt problem - $100bn from the days of the Soviet Union and another $50bn borrowed since then.

It was only in March that the IMF conditionally agreed to reinstate an estimated $4.8bn in loans - exactly the amount Russia is due to repay to the IMF in 1999.





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