All these had the end result of compromising regional budgets and GDP from The moratorium imposed by the Joint Statement expired on 15 Novemberand the Russian government and Central Bank did not renew it.
It is claimed that the wage debts by coal miners in the nation grew to more than one percent of the governments overall budget Colorado School of Business Irregular internal loan payment is also to be blamed for the Russian crisis McArdle In the case of Russia, foreign banks were willing to lend to Russian firms even if the latter were highly risky due to their uncompetitiveness because the enterprises could be bailed out by the Russian government in they faced the risk of bankruptcy.
All these served to negate the social and economic lifestyle of the Russian citizens. The restructuring involved debt relief and rescheduling of interest and principal payments and its purpose was to enable the country to regain access to international financial markets.
The Russian government made different attempts to improve the situation. When the country was experiencing the crisis, the IMF advised it to tighten its interest rates and reduce budget deficit, measures which exacerbated the crisis Birkenes and Pennell 2.
According to available statistics, the Russian economic was highly dependent on petroleum, natural gas, metal, timber exports which accounted for an estimated 80 percent of its exports.
The above measures were, however, inadequate in tackling a problem that had taken many years to form. The currency depreciated sharply as a result.
The second step was defaulting on short term treasury bills, or GKOs, and long term Ruble-denominated bonds Rabobank. Because of the severe instability of the Ruble, global businesses did not want to possess business with Russia.
Jeffrey Sachs, for instance, blames the seriousness of the crisis on the International Monetary Fund IMF demand for tight fiscal and monetary policy in Russia during the crisis. Gaddy and Ickles, on the other hand, contend that the structural problems that led to the crisis were brought over from the Soviet era Gaddy and Ickles The MICEX rate was and is commonly used by banks and currency dealers worldwide as the reference exchange rate for transactions involving the Russian ruble and foreign currencies.
On 14 August the exchange rate of the Russian ruble to the US dollar was still 6.
The Russian crisis led to a heated political crisis on the Yeltsin government. The former Russian economic structure began to cripple, meanwhile a new one was not built yet. Conclusion The Ruble crisis was a symptom of problems in the Russian institutional and economic structure, and the international financial system.
As a result, the Russian Ruble crisis has occurred on August This was further complicated by its huge wage debts and the eroded investor confidence which led to the sell of most their assets including rubles and stocks.
In Belarus, for instance, the crisis led to food rationing after causing shortages of basic food items Birkenes and Pennell As an explanation of this claim is the move to hike GKO interest rates to an estimated percent by Kiriyenko in June The most cited reason behind the Russian financial crisis is the ruble-dollar exchange rates crisis McArdle The available information reports that very often Russian enterprises provided unfair business.
This prompted workers to engage on strikes, a move that further complicated the economic productivity of the nation. Since the NIS countries import a significant portion of their food products from the latter countries, the situation led to an increase in food prices in the countries.The Russian financial crisis hit Russia on August The situation in Russia was exacerbated by the global recession during that time.
This recession had its roots in the Asian crisis of The causes and consequences of the Russian crisis of The period to mid was boom time for Russia’s financial markets.
The value of the Russian bonds and stocks soared, with the participation of foreigners in these asset markets increasing rapidly.
There are two main perspectives regarding the factors that caused the Russian Ruble crisis. According to one school of thought, the crisis resulted from structural problems in the Russian economy. The second perspective, on the other hand, holds that the crisis was caused by weaknesses in the global financial system (Birkenes and Pennell 1).
More Essay Examples on Russia Rubric. The Russian Ruble Crisis of is termed as among the worst financial crisis to hit the Russian economy - Russian Crisis introduction. The Crisis is believed to have been triggered by a number of factors. Custom The Russian Ruble Crisis and Its Aftermath Essay After the collapse of the Soviet Union inRussia has faced a severe Ruble crisis.
Due to the changes, which have occurred in Russia in s, its economy was in the total chaos. Russian Default 1 Intro Russian financial crisis – Ruble crisis – Russian flu -> 17th august Result => Devaluation of Ruble, Default on Debt Causes => Declining productivity high fixed exchange rate chronic fiscal deficit Economic burden of Chechen war Asian financial crisis Commodity prices – oil & non-ferrous metals – impacted foreign exchange reserves Political crisis => Russian president .Download