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Putin vows to prevent 'collapse'

Prime Minister Vladimir Putin speaks at a United Russia congress in Moscow
Mr Putin promised to preserve stability in Russia

Russia's government will do "everything" it can to prevent another financial collapse in the country, Prime Minister Vladimir Putin has said.

Speaking about the growing global economic crisis, he said "the collapses of past years will not be repeated".

He was referring to the 1991 turmoil after the collapse of the USSR and the Russian default in 1998.

Mr Putin was addressing the annual congress of the governing United Russia Party in Moscow.

Defence warning

The premier also gave an assurance that Russia's financial reserves - built up from oil and gas sales - would prevent any sharp rises in inflation and cushion the slide in the value of the national currency, the rouble.

People queue to buy sugar in a Moscow shop with almost empty shelves. Photo: September 1998
Many goods vanished from the shelves virtually overnight in 1998

He also promised a package of tax breaks to stimulate the economy.

However, Mr Putin warned that the financial crisis must not lead to "the bankruptcy of the defence industry".

He said that his government would spend an additional 50bn roubles (£1.2bn) in 2008-09 to support the industry.

The current economic downturn has hammered confidence in the Russian economy, driving down the country's stock markets by more than 70% since May.

Russia's Central Bank chief Sergei Ignatiev said earlier this month that the country's reserves had declined significantly, partly due to efforts to prop up the rouble in recent months.

Mr Ignatiev also refused to rule out the possibility that the rouble could weaken.

A fall in the rouble's value would push the price of imported food even higher - in a country which is already struggling with double-digit inflation, correspondents say.

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