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Acting Premier Says Russia Not Capable Of Paying Foreign Debt

August 28, 1992

MOSCOW (AP) _ Russia’s acting prime minister said Friday the country cannot pay more than $2 billion this year on the former Soviet Union’s vast foreign debt, the Interfax news agency reported.

Russia and the other former Soviet republics were due to pay $9.8 billion in 1992 on the debt, which is estimated at $70 billion, Interfax said. By July 27, Russia had paid $1 billion, it said.

Western governments have supported easing the former Soviet Union’s debt repayment schedule while it transforms the centrally planned economy into a free-market system.

″Russia is capable of paying no more that $2 billion in debt payments this year,″ Interfax quoted Yegor Gaidar as saying. Gaidar, 36, is the architect of Russia’s economic reform program.

In another economic development, a top Central Bank official said the bank had no plans to set a new ruble rate or to deviate from Russia’s policy of a single rate.

The ruble took a record plunge at a Moscow currency auction Thursday, falling nearly 22 percent to 205 rubles per dollar.

News reports suggested the Central Bank intended to set a separate ruble rate, as it did until the single-rate policy took effect July 1. The rate is determined at the auctions held twice a week at the Moscow Currency Exchange.

But Interfax quoted Central Bank deputy chairman Dmitry Tulin as saying the bank is not considering such a step.

The Central Bank intervened in the first six months of 1992 through a special currency fund, created by donations from export enterprises that had to sell 10 percent of their hard currency profits to the state, Interfax reported.

Tulin said the Central Bank needs $1 billion in reserve to stabilize the ruble rate, which it does not have.

″The Central Bank and the Finance Ministry face quite a difficult dilemma: whether to use the money to buy food and medicine or to support the ruble rate,″ Tulin said.

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