Moscow
18 September 2008
Russia's government is pledging an additional $20 billion to
help stabilize domestic financial markets, as trading remains suspended
for the second day amid punishing declines in stock prices. VOA Moscow
Correspondent Peter Fedynsky reports.
President Medvedev told a
Kremlin meeting of senior government financial officials and heads of
major private banks that the depth of the world's current market crisis
exceeds even the most pessimistic predictions.
He says Russia made a
conscious decision to join the global financial system, noting that it
helped the country's economic growth in recent years.
In recent
days and months, however, Russia has experienced substantial economic
losses. On Wednesday, when regulators suspended trading at midday,
Russia's RTS Index of leading stocks had fallen nearly 6.5
percent, adding to its 50-percent drop since June 1.
Analysts
estimate investors have pulled more than $35 billion out of
Russia since the beginning of last month's conflict in Georgia, which
shook confidence in Russian markets.
Mr. Medvedev says Russia's adequate currency reserves and strong economy guarantee there will be no economic shocks.
Mr.
Medvedev is proposing that the Russian government look into the
possibility of using up to 500 billion rubles, about $20 billion, to
support market stability, including $250 billion held in reserve as part
of the budget. He says this must be done immediately.
Finance
Minister Alexei Kudrin said liquidity problems at U.S. and other
foreign banks are decreasing the ability of Russian lenders to offer
credit. He added that lower global oil prices are also impacting the
Russian market. As a result, he says, there is a need to increase
liquidity in the financial sector and to stabilize accounts on the
stock market.
Kudrin says the Finance Ministry has decided to
increase limits on deposits of temporarily unallocated funds from the
federal treasury in commercial banks. He says the limit was increased
Wednesday to more than 1.5 trillion rubles, or $60 billion. Most of the funds, he says, are being provided to three
banks, Sberbank, VTB and Gazprombank, because these institutions
support most of the country's financial operations and interbank credit.
Sberbank
and VTB both suffered losses of about 20 percent before trading was
suspended Wednesday. Finance Minister Kudrin says markets will reopen
Friday.
Russian Central Bank Chairman Sergei Ignatyev says
interests rates will be lowered on a number of financial instruments by
half a percent and in some cases a full percentage point.