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Charles,
> I have read that what used to be the Soviet Union
> was the largest exporter of crude oil in the world. I have read
> that they have or had among the largest reserves of gold in the
> world. I have read that they are well endowed with natural
> resources, and are astute traders of their assets.
> Is this information false or is there something about this crisis
> that doesn't make sense?
Yes, you are exactly right. You should rather think of this crisis as
new trade of the Russian government.
A trade that netted them 80 billion roubles this year and a
further 250 billion roubles from 1999 onwards as Mr. Kiriyenko said
on the 20th August. (see article below)
The rouble was at 6.9 RUR/USD before the crisis and now at 18
RUR/USD. This means that they save even more in dollar terms -
all their exports are priced in US dollars.
This deal improves their budget position substantially. New currency
controls make sure that these export revenues go into the right
pockets.
The Russians have promised that they will pay ALL EXTERNAL USD, DEM
etc debts on time and they have done this so far. This is a
precondition for further free trade with the west because many
imports are pre-financed by western state loans. These have so far
been payed on time by the Russians - only last week there was a delay
with American food export loans.
It seems that the west has accepted that holders of DOMESTIC Rouble
debt must loose.
Which brings me to the conclusion that Russian USD dominated
eurobonds which are trading at 25% are a good buy - they are
even trading below Indonesia's debt which is currently at 40%. An
alternative is to buy PRINS (USD floating rate notes) trading at 11%.
PRINS are restructured London club (commercial bank) debts from
Soviet times. I would stay clear of USD dominated Minfins which are
settled domesticly.
Gerrit
>>>>>>>>>>>>>
Kremlin Approves New Plan For T-Bills
Russia's government Thursday approved a debt
restructure to save it 200 billion rubles to 250
billion rubles ($29 million to $36 billion) over
the next 18 months and decided to redraft its 1999
budget to account for the savings, news agencies
said.
But Prime Minister Sergei Kiriyenko said on
Russian television that the budget would be drawn
up "under the most pessimistic scenario" after the
debt overhaul and a financial crisis that has
virtually cut off access to finance from the
markets.
Itar-Tass reported that officials at a government
meeting approved two federal bills on the
restructuring of GKO T-bills and OFZ bonds, the
exact terms of which have not yet been released
but, as earlier announced, will be repaid by
Russia with new paper.
Itar-Tass quoted Finance Minister Mikhail
Zadornov as saying that if laws on the restructure
were not approved by the end of the year, the
government would have to repay 113 billion rubles
this year and 260 billion rubles next year.
If the T-bill restructuring was approved, the
government would have to pay just 14 billion
rubles to 30 billion rubles this year and 44
billion rubles to 80 billion rubles next year,
depending on what kind of plan was approved.
Kiriyenko was quoted by Itar-Tass as saying the
treasury-bill restructuring would save the
government 200 billion rubles to 250 billion
rubles in the next 18 months and 80 billion rubles
by the end of 1998.
The government also decided to redraft the 1999
budget to account for the savings and the effect
of the crisis measures adopted Monday, which
included the debt scheme, a 90-day moratorium on
debt payments and an effective ruble devaluation.
Interfax quoted Kiriyenko as saying the redrafted
budget would be adopted by the government Sept. 7
and handed to lawmakers at the State Duma,
Russia's lower house of parliament, on Sept. 21.
The prime minister said the government was being
as pessimistic as possible in the new draft,
taking into account the negative effects for
Russia's ability to raise finance from
international markets after the forced debt swap.
"We are calculating the budget of 1998 and 1999
under the most pessimistic scenario," he said on
Russian television.
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