russian crisis
The improper financial policies implemented by the Russian government during and previous to the economic crisis of November 1997 causing Russia's economy to decline lead to a severe crisis in August of 1998 which my avoided been contained or avoided if the situation would have been handled differently. Since May of 1998, Russia has been caught in the latest, and likely the most serious economic crisis. The crisis came to a head on August 17, 1998, when the government of then-Premier Sergei Kiriyenko abandoned its defense of a strong ruble exchange rate against the dollar by defaulted on government domestic debt forcing its restructuring, and placed a 90-day moratorium on commercial external debt payments. Those actions led to President Yeltsin's dismissal of Kiriyenko on August 23, replaced, after a political standoff with the Duma, by a more leftward-leaning government led by 35 year former energy secretary Yevgennij Primakov. The August crisis also lowered Russians' standard of living and set back Russia's efforts toward establishing a market economy, perhaps for years to come. The direct cause of crisis has been the Russian government's failure to address fiscal imbalances. Less direct but more fundamental causes ha
Money, gotten from the selling of government bonds, were immediately forwarded by foreign investors to the foreign exchanges market, were they were converted into dollars, lowering ruble's exchange rate. Then everything worked according to domino scheme - crisis jumped to all major exchanges. The crisis was manifested in financial and other economic indicators, both domestic and external. However, by the end of the summer the external debt of some South Asian countries approached the critical point. Again "Mosenergy" - already minus 6. Russia's immediate financial problems center on its fiscal situation. This contraction occurred after the Russian economy finally realized economic growth, although modest, of 0. On October 28 US dollar raised comparatively to Russian ruble by 54 points. In such situation it is necessary to make money more expensive, which can be achieved by increasing the key interest rates and norms of minimal reserves. One such problem has been the inability of the Russian government to collect revenues adequate to match expenditures. In first minutes of the beginning of trades at Russian stock market brokers characterized the situation as "near to collapse". Foreign investors, who played a major role on the Russian market, were intensively selling out quickly depreciating securities. The increasing burden of debt service made it difficult, if not impossible to address other budgetary priorities. It was deep night in Russia when it happened, and therefore the crisis came to them only on the following day. Crisis in August 1998 Causes:1.
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