Anatoly Chubais, until recently Boris Yeltsin's chief international financial negotiator, told Kommersant newspaper that the deception was requiredto stave off economic collapse.
His revelations coincided with a report from a ratings agency, which said that Russia may become the largest single credit loss ever suffered by the global banking system.
Fitch IBCA in London concluded that up to $100bn would have to be written off - nearly six times the $16.6bn lost in 1990 during the Mexican fiscal crisis.
Mr Chubais, a former chief-of-staff to Mr Yeltsin and architect of the privatisation drive, said the economy would have crumbled in the Spring."The financial institutions understand, despite the fact that we conned them out of $20bn, that we had no other way out."
In July, Russia secured a $23bn IMF-led loan, but this failed to prevent the collapse of the rouble, that led to a still unresolved political crisis in which Mr Yeltsin is at loggerheads with the State Duma over his choice of prime minister.
Moscow's decision to devalue - only a few days after Mr Yeltsin had vowed to do the opposite - caused deep anger in the West, both politically and among the commercial investors who are reeling from the fall-out.
There has been concern in the IMF, World Bank and elsewhere over Moscow's plans to print money before pegging the rouble to the dollar, an approach widely expected to fuel Russia's rampant inflation.
Many of the West's worries about Russia hinge on the future role in government of the resurgent Communists, led by Gennady Zyuganov.
The Communists, the largest of the array of forces ranged against the Kremlin, have finally acquired real bargaining power. And, speaking to selected foreign correspondents yesterday, Mr Zyuganov clearly knew it.
He talked airily about the importance of the multi-party system, investment, free speech, good relations with Europe, mixed property ownership. What Russia needed was a "left and centre government which will enjoy the support of the maj "We don't want power for ourselves because we don't consider that right under the circumstances," he said.
There was little trace of the other Gennady Zyuganov, the author of A Word to the People, the manifesto of the men behind the failed hardline coup against Mikhail Gorbachev in August 1991.
Nor was there any sign of the conspiracy theorist who believes that the West is plotting to create a "New World Order", or the nostalgic Soviet who remains silent about Stalin's crimes and enthusiastically praises the dictator's industrial triumphs. Yet there are also limits to his negotiating muscle, and he also knows that.
It is impossible for Mr Zyuganov to strike a deal with a Kremlin in which Viktor Chernomyrdin becomes premier. Such a cave-in would threaten his position as leader among the deeply divided ranks of his coalition of forces.
He also knows that if Mr Yeltsin refuses to budge, and the Duma is dissolved after rejecting the hapless acting premier for a third time, there is no guarantee that the Communists will benefit.
Thus, Mr Zyuganov and his colleagues have been willing to go to surprising lengths to get a deal - short of endorsing Mr Chernomyrdin. Their list of compromise candidates for prime minister includes Yevgeny Primakov, a former ally of Mikhail Gorbachev, who is loathed by many on the left who accuse him of destroying the Soviet Union. The Foreign Minister is "educated and experienced," said Mr Zyuganov yesterday. He was as complimentary about another anti-Communist, Yuri Luzhkov, the nationalist mayor of Moscow.
At bottom, Mr Zyuganov is a deal-maker. Although he boasts about his willingness to lead "massive protest actions", his impulses are to strike a bargain which gives the legislature more powers, and saves the Duma from dismissal.