Strangely, the rouble is losing value just as the rate of inflation seems to be slowing. Month-on- month inflation for the whole of 1992 was 2,623 per cent, and for the month of January this year was 25 per cent. But it dropped to 21 per cent in March, 17 per cent in April and looks like being 15 per cent this month.
Bankers, however, have little faith in this recovery, and pinpoint the reason. 'As long as the political struggle (between President Boris Yeltsin and his conservative opponents) continues, there will be no stability in the economy,' said Oleg Baguirov, executive vice-president of the commercial Toko Bank.
Other republics of the former Soviet Union also doubt that the rouble will stabilise and, encouraged by the International Monetary Fund (IMF), which has changed its previous advice to them to stay in the rouble zone, they are considering launching currencies of their own. Last week, the Central Asian republic of Kyrgyzstan joined Ukraine and the Baltic states in doing this and revived an old currency called the 'som', which means catfish in Russian. The Kyrgyz Prime Minister, Tursunbek Chyngyshev, joked: 'I think our little fish is going to swim.' The som began trading at a rate of 200 to the dollar.
For Russia, the future depends on which of his mutually exclusive promises Mr Yeltsin decides to keep. In the run-up to April's referendum, the President wooed both young and old voters by promising to raise student grants and pensions. But if he does that, inflation will rocket again and the budget deficit, already projected to reach 10 trillion roubles ( pounds 6.45bn) this year, will soar even further. Mr Yeltsin has promised the IMF that he will keep a tight rein on public spending.
Now that Mr Yeltsin has won the referendum, it seems he is more inclined to satisfy the IMF than deliver the increase to the students and pensioners. Last Friday the government and the Central Bank, which have been at odds for months over the bank's easy credits designed to prop up industry and avoid unemployment, reached an agreement to tighten monetary policy. Thus they hope to meet conditions for a promised IMF loan of dollars 3bn, which would be sold for roubles and used to finance the budget deficit.
That might be good for Russia in the long run. But it would do nothing to ease the burden of poor people like the old woman with a flowered head scarf and no teeth who was hobbling round Moscow's Baumansky Market last weekend, following the customers who could afford to buy fresh pork and Azeri apricots and telling them they would not go to heaven if they did not give her alms. A young man in a Chinese silk bomber-jacket ignored her at first but then gave her a grubby 10-rouble note.
'Thank you son, God is saving a special place for you,' she told him. The woman, whose pension is only 10,000 roubles a month, would have to get the same amount from 500 people to afford a joint of pork at the market, and a kilo of the apricots would cost her 6,000 roubles.
Tourists visiting Russia would be wrong to assume that the falling rouble gives them more spending power. While internal flights are extremely cheap for foreigners, prices in hotels and restaurants are invariably at dollar rates.
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