Yeltsin forced to soften line on money reform
Tuesday 27 July 1993
Old banknotes are still to be withdrawn from circulation in an attempt to stabilise the country's finances, but Mr Yeltsin's concession allows Russians to change a larger sum into new money than first permitted and gives more time in which to do it.
The central bank, which said its decision had the blessing of the government, set tough conditions. Russians could exchange a maximum of 35,000 pre-1993 roubles (worth pounds 51 and equal to the average monthly salary) on the spot on before 7 August. They were supposed to deposit old money in excess of this in a savings bank for six months, where interest would be no more than 100 per cent. Annual inflation is 750 per cent.
Mr Yeltsin's arch-rival, parliamentary chairman Ruslan Khasbulatov, was quick to make political capital out of the highly unpopular reform, calling it 'a confiscatory measure and a direct violation of human rights'.
Mr Khasbulatov said that although Parliament and not Mr Yeltsin's government controls the central bank, MPs had not approved the move and he called for properly organised monetary reform.
The biggest surprise was a condemnation of the reform from the Finance Minister, Boris Fyodorov, indicating a split in the Government. 'The Finance Ministry has nothing to do with this disgrace,' he said in a radio inverview. 'I personally demand that the decision should be totally abolished as economically and politically unjustified.'
Only the Prime Minister, Viktor Chernomyrdin, and central bank officials have clearly identified with the reform, which helped the rouble to rise slightly to a rate of 996 from 1,000 to dollars 1 yesterday. The popular Russian televison current affairs programme, Itogo, said Mr Yeltsin had only heard details of the central bank's action when he returned to Moscow after cutting short a holiday on Sunday.
The President's response was to issue a decree raising the amount of old money Russians could change immediately to 100,000 roubles and extending the deadline for doing so until the end of August.
It remains to be seen whether Mr Yeltsin's compromise will stop the howls of protest. His decree came too late to stop crowds of people descending on the banks yesterday.
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