Yeltsin sacks his tax chief

BORIS YELTSIN sacked his top tax man. His cabinet announced a package of plans. And Western banks worked round the clock to make sure they could rescue Russia if it eventually goes over the precipice.

So it was that a confidence-building drive unfolded yesterday to save Russia from a rouble collapse that would destroy the limited achievements of market reform and deepen the risk of political instability in a heavily armed country.

As Mr Yeltsin launched a fight-back after Wednesday's market tumble - applauded from the sidelines by President Bill Clinton and his old friend, the German Chancellor Helmut Kohl - the International Monetary Fund finally signalled it would approve the next $670m (pounds 410m) tranche of a $9.2bn loan to Moscow, even though Russia will have to wait to the end of June to get the money.

Mr Yeltsin began the day by announcing he had fired Alexander Pochinek, head of the tax service, replacing him with the former finance minister, Boris Fyodorov. The move was intended to appease the IMF, which has been demanding that Russia squeeze more tax from an economy which is short of roubles, run by a business community riddled with corruption and employs a population for whom taxes are still largely an alien concept.

The new government of Prime Minister Sergei Kiriyenko joined the battle. As the markets steadied the cabinet issued a statement promising to carry through Mr Yeltsin's plans to cut budget expenditures by $7bn this year; to accelerate the privatisation of state companies; and to squeeze nearly $1bn from 20 of the worst corporate tax debtors.

Underlying this financial squall is the fear that the rouble will collapse, causing hyperinflation and even deeper discontent in a population exhausted by nearly a decade of economic decline.