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Russian Currency Reserves Plunge

December 8, 1998

MOSCOW (AP) _ Russia’s hard currency reserves fell 8 percent last month, drained by debt payments and efforts to prop up the increasingly weak ruble, officials said today.

The Central Bank’s reserves, which stood at $13.6 billion at the start of November, shrank to $12.5 billion by the end of the month, the Interfax news agency reported, quoting a bank announcement.

Reserves have dropped by nearly 30 percent since the start of the year, the bank said.

The Central Bank spent reserves trying to halt the steady decline of the ruble, which is now at more than 20 to the U.S. dollar. Before the economic crisis hit in August, the ruble was trading at around 6 to the dollar.

Since Russia’s financial meltdown in August, the ruble has been closely watched as a bellwether of economic confidence in the country. Its steady dive has reflected fears that the government will crank up the printing presses to pay domestic and foreign debts _ almost certain to result in high inflation.

The International Monetary Fund and a group of other lenders put together a $22.6 billion bailout package last summer, but only released around $5 billion before freezing further installments.

Lenders want the government to come up with a viable budget before resuming the loans. The IMF has criticized the earlier government’s blueprint as overly optimistic on revenues and heavy with administrative controls over the economy.

After several delays, the Cabinet plans to discuss the 1999 budget on Thursday. In the past few years, the government and the parliament have failed to finalize the budget before the new year, further complicating the process.

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