This website uses cookies to ensure you have the best experience. Learn more

The Russian Ruble Crisis Of 1998

1573 words - 7 pages

The Russian Ruble Crisis of 1998 is termed as among the worst financial crisis to hit the Russian economy. The Crisis is believed to have been triggered by a number of factors. The Asian financial crisis of 1997 is a major cause of the crisis as it led to declines in the world commodity prices (Owyang, & Chiodo 2002, p. 7). Just to be appreciated is the fact that Russian economy was heavily dependent on oil. There are other reasons such as the downfall of the Soviet Union in 1991 and the economic difficulties it brought to the Russian nation. Another common cited reason is poor financial policy practices by the Russian government as well as political crisis that were witnessed in the ...view middle of the document...

It is claimed that the Asian financial crisis of 1997 significantly compromised the export demand as well as prices for these key Russian export commodities (Colorado School of Business 2009). All these had the implication of negating the nation’s ability to pay its workers and its domestic debts, a factor that evidently led the country into a financial crisis.
Another cause of the crisis is the fact that the government relied mainly on foreign capital inflows which were marked with extremely high interest rates (McArdle 2010). The sustainable growth of an economy is greatly determined by the ability of the government to finance its affairs from its tax revenue collections. However, the Russian government was in 1998 facing an increase in its internal loan, a factor that called for engagement into external borrowing to finance them (Colorado School of Business 2009). As an explanation of this claim is the move to hike GKO interest rates to an estimated 150 percent by Kiriyenko in June 1998.
Irregular internal loan payment is also to be blamed for the Russian crisis 1998 (McArdle 2010). Statistical evidence indicates that despite the many efforts by the government to resolve its internal debts, wage debts, particularly in remote regions continued to grow. This had negative impact on the nation’s ability to fund key budget items such as communal utilities among others. It is claimed that the government was faced with an estimated $12.5 on wage debts by early August 1998 (Owyang, & Chiodo 2002, p. 9). This prompted workers to engage on strikes, a move that further complicated the economic productivity of the nation.
Still, the war on Chechnya and its economic implications were cited as a potential cause of the Russian financial crisis of 1998 (Tarassova, Kraakman, & Black 2000, p. 27). According to available historical information, the war cost on the Russian economy is approximated at $5.5 billion. Just to be appreciated here is the fact that this cost is exclusive of the costs incurred in reconstruction of the ruined economy of Chechnya after the war (Tarassova, Kraakman, & Black 2000, p. 27). The opposition by the left wing parties of the government which led to failure to adopt anti-crisis policies by the government by mid 1998 is also another cause of the crisis. It is also claimed that prior to the meltdown, a loan given to Russian by the world bank and the International Monetary Fund was stolen, thus never functioned to serve its intended purpose.
The most cited reason behind the Russian financial crisis is the ruble-dollar exchange rates crisis (McArdle 2010). During this time, the Russian government had ordered the central bank to ensure that the ruble exchange rates remained at a preset range. Based on this reasoning therefore, the central bank was forced to invest its foreign reserves in buying rubles if the exchange rate seemed to go beyond such limits. Indeed, this was a major threat to its ability to maintain...

Other Papers Like The Russian Ruble Crisis of 1998

Causes Of The 1917 Russian Revolution

2592 words - 11 pages The revolution of March 1917 wasn't just a sudden event that happened and was planned over night, there were many causes, long and short term that finally brought out the peoples strength.There were many long-term reasons for the Russian people being dissatisfied. The people weren't being governed properly. This was because Russia was full of many different races and social classes and it was a very large empire, almost twice the size of China

Russian Reforms Of The 1800's Essay

775 words - 4 pages , who could do the work, but simply could not afford it. Lower levels of education were to be run by the people who lived, and worked with the schools. Local boards similar to school boards with officials oversaw the schools. Although I attend a private school and cannot exactly relate my education to that of a Russian one, I can say that post reform education is very similar to public school education here in modern America. However one

Topic “Prosocial Behaviour Is the Outcome of Multiple… Factors” (Eisenberg & Fabes, 1998, P.742)

2599 words - 11 pages Developmental Psychology | PSY 484 - X 2010 | TOPIC: “PROSOCIAL BEHAVIOUR IS THE OUTCOME OF MULTIPLE… FACTORS” (Eisenberg & Fabes, 1998, p.742). | DISCUSS THIS STATEMENT WITH REFERENCE TO: (A) CULTURAL FACTORS (B) SOCIALISATION OF PROSOCIAL BEHAVIOUR WITHIN THE FAMILY (C) THE CHILD’S INDIVIDUAL CHARACTERISTICS | Contents Introduction 3 Cultural Factors 3 Socialization within and outside the family

The Causes Of The Russian Revolution In 1905

566 words - 3 pages The combination of factors that brought tension into the Russian society reached the top point in 1905; revolution took place because of military, economic, and political reasons.The failure of the war against Japan was one of the main short-term causes of the revolution. 1904, Plehev, the Tsar's Minister of the Interior recommended Nicholas 'a small victorious war to stop the revolutionary tide'. This policy resulted in the Russo-Japanese War

The Impact of English Loanwords on Russian Language

3819 words - 16 pages The impact of English loanwords on the Russian lexis for the recent decades Introduction Russian people for a long time have been involved into the political, commercial, scientific and cultural relations with other nations. At the same time the Russian language has been replenished with words from other languages. Loanwords from ancient languages Greek and Latin, words from Dutch, German, Polish, Ukraine and other languages mastered the

Implementation of the Human Rights Act 1998 Has Impacted Upon Many Areas of Tort Law. Choose One of These Areas and Assess the Act’s Impact. 

2490 words - 10 pages Implementation of the Human Rights Act 1998 has impacted upon many areas of tort law. Choose one of these areas and assess the Act’s impact.  Traditionally, up to the Human Rights Act 1998 (HRA) for the Convention and the all the individuals living in the United Kingdom had no domestic law.This resulted them to go to the European Court of Human Rights in Strasbourg in order for them to correct the breach of their Convention rights. Thus the

The Real Causes of the Syrian Crisis

971 words - 4 pages The Real Causes Of The Syrian Crisis The Syrian conflict is one of the most top issues at the moment, because now, after that in Syria was used chemical weapons it affects all worldwide. The Syrian civil war or Syrian uprising or also known Syrian crisis is an ongoing armed conflict in Syria between forces loyal to the government and those seeking to out it. It all started 15 March, 2011 with demonstrations which were part of the wider

The Beginnings of the Sectional Crisis

871 words - 4 pages The Beginnings of the Sectional Crisis During the antebellum period, the North and the South were complete opposites. This led to each side viewing itself as superior and viewing the other as "backward." Each side believed itself to be superior, in all aspects, to the other. The reasons for these opinions can be found in the different economic, social, and cultural systems found in these two regions. The Southern economy was primarily

The Crisis of Crimea and Ukraine

3916 words - 16 pages the time, but in a step-by-step process, the Partnership for Peace would bring Hungary, Poland, and the Czech Republic into the NATO alliance by 1999. As the current crisis in Ukraine continues, this expanded NATO offers the structure for the protection of these new European democracies. While careful to respect the Russian people, the objectives of the Partnership for Peace and its implementation over the past two decades have ensured that this

The Impact of Asean Crisis in Malaysia

4799 words - 20 pages that heavily restricted private foreign borrowing. The BAFIA essentially prevented Malaysian banks and individuals from becoming overexposed to short-term foreign borrowing, a problem that forced South Korea, Indonesia, and Thailand seeks IMF assistance following the 1997 crisis. Malaysia can feel wrong because all the things we did in the 1997 to 1998 crisis, which were doomed by the economists of Europe and America, are now being done by them

Causes of the Indonesian Financial Crisis

1195 words - 5 pages | Exhibit 2. Composition of national debt (in US$ million) World Bank (1998). Development Data: Country Data: Indonesia, URL: http://www.worldbank.org/data/countrydata/countrydata.html, January 1999. Exhibit 3. Rupiah per US$ exchange rate during the crisis January 1, 1997 to February 11, 1998 Source: Datastream January 1999

Related Essays

The Causes And Consequences Of The Russian Crisis Of 1998

2311 words - 10 pages The causes and consequences of the Russian crisis of 1998 The period 1995 to mid-1997 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. International investors’ optimism about the country’s future was lifted by stabilization policy that followed the advice of Western institutions. Russian crisis of 1998 were caused

Russian Crisis 1998 Essay

2440 words - 10 pages . Over time the stock market lost up to 75 percent of its value, 39 percent of it in just May 1998. The government finally declared to freely float its exchange rate against U.S Dollars. One of main causes for the Russian Ruble crisis was the exchange rate and the peg, instead of letting it float, the government ended up spending billions of U.S Dollars to protect Rubles, which was a waste. Even the fiscal policies had a lot of faults, barely any

The Crisis In Ukraine: Russian Government And The West

1875 words - 8 pages , but it’s going to make it a lot harder for the country to increase productivity in the future. To add to its problems, Rating firm Moody's has downgraded Ukraine's sovereign debt rating a notch, citing the country's escalating political crisis and concerns about whether it will continue to have Russian financial support. It’s clear that Ukraine needs to make some major structural economic reforms quickly, which the conditions of the EU deal might

Overview Of The Russian Real Estate

4026 words - 17 pages 1. Introduction.Both the Russian Constitution, adopted in 1993, and the Civil Code, adopted in 1994, uphold the right to own private property, which includes both land plots and buildings. Despite these guarantees, however, land reform was for a long time the subject of national political debate. Several proposed land codes worked their way through the State Duma, the lower house of Parliament, only to have the President reject them, largely