RUSSIA: PRESIDENT YELTSIN PROMISES NOT TO DEVALUE ROUBLE (2)

(14 Aug 1998) Russian/Nat

Despite the plummeting rouble, Russian President Boris Yeltsin has ruled out a devaluation the rouble.

Instead, he has called on the lower house of parliament to reconvene for an emergency session to respond to Russia's unfolding economic crisis.

Opposition leaders have agreed to reconvene the Duma sometime within the next few weeks for a session which is sure to give Yeltsin's austerity plan a rough ride.

In recent days, the Russian stock market has slipped rapidly and the rouble has come under intense pressure, prompting fears that a devaluation could well inevitable.

Russian President Boris Yeltsin, who is making a one-day visit to the medieval city of Novgorod, said the economic situation was under control and he saw no reason to break his holiday to return to Moscow.

He told waiting journalists that this week's problems had come as a result of global pressures.

Yeltsin has been on holiday since the middle of July, despite calls by opposition leaders to return to the capital to deal with the financial crisis.

SOUNDBITE: (Russian)
"We think it is best not to devalue the rouble, to support it and hold it steady. Yes there is a new wave of world financial crisis and so we need to protect ourselves, in order to keep the situation under control here."
SUPER CAPTION: Boris Yeltsin, Russian President

While the financial crisis has been developing, opposition politicians have taken the opportunity to criticise the government.

Much will depend on the opposition dominated parliament which will convene to discuss the economic downturn and vote on a series of stabilisation packages they failed to pass before the summer recess.

SOUNDBITE: (Russian)
"We will demand that the very first question at the special session of parliament will deal with is that regarding the extreme financial situation today. Unfortunately there has been no initiative from the President himself on this matter. He is clearly busy resting."
SUPER CAPTION: Gennady Zyuganov, leader of Russian communist party

The Russian stock market opened slightly higher on Friday - boosted in part by a last-minute U-S efforts to supplement a recent bailout package by the International Monetary Fund.

In a further international response, deputies from the Group of Seven industrial nations held a conference to discuss Russia's deteriorating economic situation.

And while Yeltsin's promise to avoid devaluation may have come as a relief to some, many foreign investors said they needed more than Presidential assurances.

SOUNDBITE: (English)
"I don't think Yeltsin's announcement had any impact on the market whatsoever, I think that the markets right now are more looking for external signs to decide whether they are confident or not and they are looking to see what's going to happen outside in other markets in the world and they are looking to see whether there is going to be any additional aid coming from the G-7 or I-M-F."
SUPER CAPTION: Bill Browder, Fund Manager, Hermitage Investments

Trading on the rouble was almost non-existent on Friday as Russian banks backed away from trading with one another.

Concern also continued to grow about the stability of a number of Russian banks.

In addition to the speculation about a possible devaluation, rumours are now circulating about impending bankruptcy.

The next few days and weeks are likely to be an testing time for bankers, foreign investors and the Russian public.

Their future it seems, could be out of their control.

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