**RUSSIAN ECONOMICAND FINANCIAL DEVELOPMENTS**

**FOR WEEK ENDINGJANUARY 21, 2000**

** **

26 JAN 00

SOURCE: U.S. EMBASSYMOSCOW

 

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FINANCIAL MARKETINDICATORS

---------------------------

 

1. FINANCIAL MARKETTRENDS

 

THE STOCK MARKETCOOLED OFF A BIT THIS WEEK AS MARKET

PLAYERS DECIDED TOTAKE SOME PROFITS AND POLITICAL

INFIGHTING IN THENEW DUMA ADDED NEGATIVE SENTIMENT.

THE RTS INDEX LOSTONLY 0.28 PERCENT FOR THE WEEK IN

REAL TERMS,FOLLOWING A SMALL RALLY ON FRIDAY.

 

INTERNATIONALRESERVES WENT UP BY USD300 MILLION TO

USD12.6BILLION.  BASE MONEY SUPPLY WASDOWN BY 2.78

PERCENT THIS WEEKAND TOTALED R300.6 BILLION.

 

---------------------------------------------

2. ECONOMIC ANDFINANCIAL MARKET DEVELOPMENTS

---------------------------------------------

 

--  RUSSIAN INDUSTRIAL PRODUCTION GREW BY8.1 PERCENT

IN 1999.  INDUSTRIAL PRODUCTION IN DECEMBER WASUP BY

11.1 PERCENT (Y-O-Y).

 

--  ACCORDING TO ARKADIY VOLSKY, THEPRESIDENT OF THE

RUSSIAN UNION OFENTREPRENEURS AND PRODUCERS, THE SIZE

OF RUSSIA'SINVESTMENT MARKET OVER THE NEXT 20 YEARS IS

USD2 TRILLION.

 

-- TRADE MINISTERKALASHNIKOV SAID CHECHNYA WILL NEED

R300 MILLION INFINANCING FOR THE SOCIAL SPHERE.

 

--  THE MOSCOW TAX POLICE CONDUCTED 3234INSPECTIONS IN

1999.  THEY COLLECTED R2.8 BILLION FORVIOLATIONS AND

INITIATED 250CRIMINAL CASES AGAINST PRIVATE

INDIVIDUALS.  IN 1999, THE MOSCOW TAX POLICEINITIATED

1062 CRIMINAL TAXCASES IN 1999.

 

-- THE CHAIRMAN OFTHE PENSION FUND SAID THE FINANCE

MINISTRY WILL HAVETO TRANSFER R6.14 BILLION TO THE

PENSION FUND IN THEFIRST QUARTER OF 2000.

 

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3.  BANK ALERT

--------------

 

-- THE CENTRAL BANKOF RUSSIA (CBR) REPORTED RUSSIA'S

GOLD AND CURRENCYRESERVES AT USD12.6 BILLION ON

JANUARY 14, UP FROMUSD12.3 BILLION A WEEK EARLIER.

THIS IS THE HIGHESTLEVEL OF RESERVES SINCE OCTOBER

1998.

 

-- EFFECTIVE JANUARY24, THE CBR WILL LOWER THE

REFINANCING RATEFROM 55 P.A TO 45 P.A.  CBRCHAIRMAN

GERASCHENKO PROPOSEDTHIS STEP TWO WEEKS AGO.  ACTING

PRESIDENT PUTIN SAIDTHEN THAT "THIS WOULD BE A VERY

GOOD SIGNAL TOMARKETS AND THE REAL SECTOR, EVIDENCE OF

A REAL STABILIZATIONOF RUSSIAN ECONOMY."

 

-- THE BOARD OFDIRECTORS OF THE AGENCY FOR

RESTRUCTURING CREDITORGANIZATIONS (ARCO) HAS DECIDED

TO CREATE A NEWAGRICULTURAL BANK, TO BE REGISTERED AS

A NEW CREDITORGANIZATION FOUNDED BY ARCO. ITS

AUTHORIZED CAPITALWILL BE R375 MILLION.  ARCO PLANS

THAT THE GOR WILLHOLD A 51 PERCENT STAKE IN THE BANK

AND THE REST WILL BEPURCHASED BY RUSSIAN REGIONAL

GOVERNMENTS. THE NEWBANK WILL BE HEADED BY YURI

TRUSHIN, WHOPREVIOUSLY WORKED IN AGROPROMBANK AND SBS-

AGRO.  THE SUPERVISORY COUNCIL OF THE BANKWILL CONSIST

OF OFFICIALS FROMTHE AGRICULTURE, FINANCE AND

ECONOMICSMINISTRIES, AND FOUR OF ARCO'S DEPUTY

DIRECTORS.

 

-- ARCO SAID IT WILLNOT PARTICIPATE IN THE

REHABILITATION OFTVERUNIVERSALBANK BECAUSE THE BANK'S

FINANCIAL STANDINGHAS IMPROVED.  THE BANK HAS NEW

INVESTORS, INPARTICULAR THE NOVOLIPETSK METALLURGY

MILL.

-- THE MOSCOWARBITRATION COURT DECLARED

MOSBUSINESSBANKBANKRUPT AND PUT THE BANK INTO

RECEIVERSHIP.  THE COURT APPOINTED EDUARD REBGUN

RECEIVER ON THERECOMMENDATION OF THE BANK'S CREDITORS.

THE COURT DISMISSEDTHE BANK'S MANAGEMENT, TOOK AWAY

ITS AUTHORITY TODISPOSE OF ASSETS, AND ORDERED IT TO

HAND OVER ALLDOCUMENTATION TO THE RECEIVER WITHIN

THREE WEEKS.  THE CBR REVOKED THE BANK'S LICENSE ON

JUNE 29, 1999.  AT THE END OF JULY, MOSBUSINESSBANK

(ALONG WITH FIVEOTHER BANKS) LOST THE RIGHT TO SERVICE

MOSCOW CITYGOVERNMENT ACCOUNTS.

 

-- PROMSTROYBANK-ST.PETERSBURGANNOUNCED IT PAID USD27

MILLION TO FOREIGNCREDITORS AHEAD OF SCHEDULE.  THE

BANK SIGNED A DEBTRESTRUCTURING AGREEMENT WITH

CREDITORS IN THEFALL OF 1999.  THE CONDITIONS FORTHE

RESTRUCTURINGINCLUDED AN ADVANCE PAYMENT OF USD7.6

MILLION, MONTHLYINTEREST PAYMENTS, THE SETTLEMENT OF

PRINCIPAL DEBT ONCEEACH QUARTER FOR THREE YEARS, AND

EQUAL TREATMENT FORALL CREDITORS.  ITS FOREIGN

LIABILITIES INCLUDEA 1998 SYNDICATED 6-MONTH LOAN OF

USD45 MILLION, ANEBRD MID-TERM LOAN OF USD17 MILLION,

AND USD30 MILLION INPROMISSORY NOTES.

 

-- ASSETS AT MENATEP-ST.PETERSBURGBANK INCREASED 860

PERCENT AS OFJANUARY 1, 2000 (Y-O-Y) TO R15.5 BILLION,

MENATEP-ST.PETERSBURGCEO VITALY SAVELYEV SAID.  PRE-

TAX PROFITS AT THEBANK IN 1999 AMOUNTED TO R89.8

MILLION, WITH NETPROFIT OF R29 MILLION.  THE BANK'S

CREDIT PORTFOLIO ATTHE END OF 1999 EXCEEDED R5

BILLION, COMPAREDWITH R650 MILLION AT THE BEGINNING OF

THE YEAR.  AS OF THE END OF 1999, 22 OF THE BANK'S46

BRANCHES WEREPROFITABLE, COMPARED WITH FOUR OUT OF 45

AT THE BEGINNING OFTHE YEAR.  THE BANK'S CONSOLIDATED

BALANCE SHEET TOTALINCREASED IN 1999 FROM R100 MILLION

TO R2 BILLION.

 

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4. PRICES

---------

 

ACCORDING TOGOSKOMSTAT, INFLATION FOR THE FIRST 17

DAYS OF JANUARYTOTALED 1.9 PERCENT.  DURING THEPERIOD

JAN.11-17, PRICESGREW BY 0.8 PERCENT.  AVERAGE DAILY

INFLATION HASINCREASED SUBSTANTIALLY IN JANUARY, TO

0.109 PERCENT,COMPARED TO 0.040 PERCENT IN DECEMBER

1999, WHEN MONTHLYINFLATION WAS 1.3 PERCENT.

 

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5. FINANCIAL MARKETTABLES

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A. THE RUBLE EDGESUP

---------------------

 

ALL THROUGH THEWEEK, THE RUBLE WAS SLOWLY BUT STEADILY

FIRMING, AND THEMICEX "TOD" DOLLAR WAS DOWN 0.46 PERCENT

FOR THE WEEK.  WEEKLY MICEX TRADE VOLUMES WERE USD937

MILLION AND USD576MILLION FOR "TOD" AND "TOM",

RESPECTIVELY,SLIGHTLY LOWER THAN LAST WEEK, BUT GREATER

THAN THE AVERAGEOVER THE LAST FEW MONTHS.

 

TABLE 1A:  RUBLE RATES -- MICEX SELT TRADING (NOTE1)

 

------------------------------------------------

           USD-TOD   USD-TOD   USD-TOM  USD-TOM

  DATE     AVERAGE   VOLUME    AVERAGE   VOLUME

           PRICE   (USD MN)    PRICE   (USD MN)

 

01/17/00      NO TRADING      28.6844    144.79

01/18/00   28.5710     214.32  28.6036      95.00

01/19/00   28.5169     264.10  28.5659     112.92

01/20/00   28.5141     264.73  28.5557      89.14

01/21/00   28.4421     194.49  28.5150     134.19

 

TABLE 1B:  RUBLE RATES -- CASH RATES AT EXCHANGEPOINTS

(RUBLES PER USD)(NOTE 2)

-------------------------------------------------

                   PRCT CHNG           PRCTCHNG

  DATE     AVERAGE   AGAINST  AVERAGE   AGAINST

            BUY    WEEKAGO    SELL    WEEK AGO

-------------------------------------------------

01/17/00    28.50       3.04   28.76        2.31

01/18/00    28.51       0.85   28.79       -1.87

01/19/00    28.48       0.07   28.73       -0.79

01/20/00    28.50       0.39   28.75       -0.28

01/21/00    28.39       0.04   28.69       0.03

 

TABLE 1C:  RUBLE RATES-- CBR OFFICIAL EXCHANGERATE

-----------------------------------------

                    PRCT CHNG   PRCT CHNG

  DATE    OFFICIAL    AGAINST     AGAINST

           RATE     WEEKAGO    01/01/00

 

01/17/00   28.5700         4.92       5.81

01/18/00   28.5700         3.03       5.81

01/19/00   28.5700         0.46       5.81

01/20/00   28.5200        -1.14       5.63

01/21/00   28.5100        -0.49       5.59

 

 

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B. OFZ MARKET

-------------

 

PRICES ON THESECONDARY GKO/OFZ MARKET WERE UP ON

MONDAY.  THE SHORTEST OFZ ISSUE HAD A YIELD OF22

PERCENT P.A. AND THELONGER TERM OFZ YIELDS FLUCTUATED

IN THE RANGE OF 56-58PERCENT P.A.  PRICES STARTED TO

SLIDE DOWN DURINGTHE WEEK.  ON FRIDAY, HOWEVER,YIELDS

JUMPED UP AGAIN,FUELED BY NEWS OF INCREASING

INTERNATIONALRESERVES AND THE LOWERING OF THE

REFINANCE RATE BYTHE CBR FROM 55 TO 45 PERCENT.

 

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C. SHORT-TERMINTERBANK SHARPLY DOWN

------------------------------------

 

SHORT-INTERBANKRUBLE LOAN RATES REMAINED AT RELATIVELY

LOW LEVELS THROUGHOUTTHE WEEK.  THE ONLY REAL ACTIVITY

WAS IN THE SHORTEST-TERMSECTOR OF THE MARKET.  THE

REST OF THE MARKETWAS QUIET DURING THE WEEK, WITH

RATES REMAININGUNCHANGED.  BALANCES ON BANKS'

CORRESPONDENTACCOUNTS IN THE CBR DECREASED THROUGHOUT

THE WEEK, REACHING AMINIMUM OF R58.7 BILLION ON

FRIDAY.

 

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TABLE 4: INTERBANKCREDIT

--------------------------

 

 DATE                     PERIOD (IN DAYS)

 -----------------------------------------------------

                  1     7     14    30    60     90

 -----------------------------------------------------

 

JAN 17   MIBID   06.2  10.0   12.0   14.0   17.0  20.0

        MIBOR   12.8   20.0   22.0  24.0   27.0  33.0

 

JAN 18   MIBID   08.2  10.0   12.0   14.0   17.0  20.0

         MIBOR   14.6   20.0  22.0   24.0   27.0  33.0

JAN 19   MIBID   05.4  10.0   12.0   14.0   17.0  20.0

        MIBOR   12.0   20.0   22.0  24.0   27.0  33.0

 

JAN 20   MIBID   06.6  10.0   12.0   14.0   17.0  20.0

        MIBOR   13.2   20.0   22.0   24.0   27.0  33.0

 

JAN 21   MIBID   05.5  04.0   07.0   14.0   17.0  20.0

        MIBOR   11.5   10.0   17.0  24.0   27.0  33.0

 

 

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D. STOCK MARKETRALLY

---------------------

 

AT THE BEGINNING OFTHE WEEK, THE STOCK MARKET

EXPERIENCED DOWNWARDPRICE CORRECTIONS AS BOTH RESIDENT

AND NON-RESIDENTINVESTORS DECIDED TO TAKE THEIR

PROFITS FROM RECENTMARKET GAINS.  THE POLITICAL

TURMOIL IN THE DUMAAND A WORSENING SITUATION ON WORLD

CAPITAL MARKETSADDED MORE DOWNWARD PRESSURE. LATER ON

IN THE WEEK, BUYERSENTERED THE MARKET AND PRICES BEGAN

TO GROW AGAIN.  THE DOLLAR-ADJUSTED RTS INDEX BROKE

THROUGH THE 200 MARKON FRIDAY AND FINISHED DOWN ONLY

0.28 PERCENT FOR THEWEEK IN REAL TERMS.

 

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TABLE 5: RTS STOCKINDICES

--------------------------

                                             DOLLAR

DATE    RTS INDEX       PERCENT CHANGE      ADJUSTED

          (R)       NOMINAL(RUB) REAL (USD)

 

JAN 17  1271.45         -2.64       -2.37     197.91

JAN 18  1250.10         -1.68       -1.68     194.58

JAN 19  1179.75         -5.63       -5.63     183.63

JAN 20  1232.41          4.46       4.65    192.16

JAN 21  1295.95          5.16       5.19    202.14

 

 

-------------------------

E. INTERNATIONALRESERVES

-------------------------

 

INTERNATIONALRESERVES OF THE CENTRAL BANK AND THE

FINANCE MINISTRYINCREASED LAST WEEK BY 2.4 PERCENT OR

USD300 MILLION ANDREACHED USD12.6 BILLION.  THIS IS

THE HIGHEST LEVEL OFINTERNATIONAL RESERVES SINCE

OCTOBER 1998.

 

-----------------------------------------

TABLE 6:INTERNATIONAL RESERVES (NOTE 5)

-----------------------------------------

 

INTERNATIONAL  BLN USD  PERCENT CHG PERCENT CHG

RESERVES                 PREV WK     01.01.00

 

01.14.00        12.6      2.4         02.4

01.07.00        12.3     -1.6         00.0

12.31.99        12.5     -1.6         02.5(PRNT CHNG01.01.99)

12.24.99        12.7      5.8         04.1(PRNT CHNG01.01.99)

12.17.99        12.0      1.7        -01.6(PRNT CHNG01.01.99)

 

 

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F. MONETARY BASE

----------------

THE MONETARY BASEDECREASED THIS WEEK FOR THE FIRST

TIME IN SIXWEEKS.  IT DECREASED BY 2.78PERCENT TO

TOTAL R300.6BILLION.

 

--------------------------------

TABLE 7: MONETARYBASE (NOTE 6)

--------------------------------

 

MONETARY   BLN RUBLES    PRCT CHNG FROM       PRCT CHNGFROM

BASE                       PREV. WEEK       PREV. 4 WK AVG

 

01.17.00     300.6           -2.78                 1.1

01.10.00     309.2           1.05                 7.3

12.27.99     306.0           5.81                 9.5

12.20.99     289.2           1.58                 4.7

12.13.99     284.7           4.44                 3.8

 

--------------------------

G. CORRESPONDENTACCOUNTS

--------------------------

 

-------------------------------------------

TABLE 9: BALANCES ONCORRESPONDENT ACCOUNTS

-------------------------------------------

 

       DATE                BALANCE (BLN RUB)

 

      01.17.00                    72.469

 

      01.18.00                    65.929

 

      01.19.00                    63.077

 

      01.20.00                    68.923

 

      01.21.00                    58.657

 

 

EXPLANATORY NOTES

 

1. EXCHANGE RATES:SELT - "SYSTEM OF ELECTRONIC LOT

(CURRENCY)TRADING" - A COMPUTER-BASED OTC-TYPE TRADING

SYSTEM ORGANIZED BYTHE MOSCOW INTERBANK CURRENCY

EXCHANGE(MICEX).  USD-TOD PRICE IS THEPRICE OF THE

DOLLAR WITH THE SAMEDAY DELIVERY.  USD-TOM PRICE IS

THE PRICE OF THEDOLLAR WITH DELIVERY ON THE NEXT DAY.

MINIMUM LOT SIZE FOREACH OF THE DOLLAR INSTRUMENTS IS

USD1OO,000.  AVERAGE PRICE IS QUOTED AS THE WEIGHTED

AVERAGE OF ALL THEBIDS AND OFFERS ENTERED INTO THE

SYSTEM BY VARIOUSBANKS.

 

2. AVERAGE CASHRATES ARE QUOTED AS CALCULATED BY THE

INTER-LINEINFORMATION AGENCY THAT PROCESSES DATA FROM

OVER 500 EXCHANGEPOINTS IN THE CITY OF MOSCOW.

 

3. INTEREST RATES:THE TABLE PROVIDES MOSCOW INTERBANK

BID (MIBID) ANDMOSCOW INTERBANK OFFERED RATE (MIBOR) -

- ANNUALIZED AVERAGEBID AND OFFER RATES ON SHORT-TERM

RUBLE LOANS BETWEENCOMMERCIAL BANKS.

 

4. STOCK INDICES: THERTS INDEX, IS THE ONLY OFFICIAL

INDICATOR OF THERUSSIAN TRADING SYSTEM.  IT IS

CALCULATED EVERY 30MINUTES OF THE RTS TRADE SESSION,

STARTING FROM12:00.  IT COMPRISES 60 SHARES OF35

LEADINGCOMPANIES.  THIS SHARES AREINCLUDED IN SO-

CALLED CATEGORY"A" LISTING.  THE INDEXINDICATES OVER-

THE-COUNTER STOCKPRICES.  THE INDEX REPRESENTS THE

RATIO OF THE TOTALMARKET CAPITALIZATION OF THE SHARES

OF THE COMPANIESSELECTED FOR THE INDEX TO THE TOTAL

MARKETCAPITALIZATION OF THE SAME SHARES AS OF THE

INITIAL DATEMULTIPLIED BY THE INDEX VALUE AS OF THE

INITIAL DATE (31DECEMBER, 1997) USING A BASE OF 100

BEGINNING SEPTEMBER1, 1995.  THE RUBLE-ADJUSTED INDEX

IS A DERIVATIVE OFTHE MAIN DOLLAR INDEX, USING THE

SAME BASE.

 

5. INTERNATIONALRESERVES OF THE RUSSIAN FEDERATION

REPRESENT THE AMOUNTOF RESERVE ASSETS OF THE BANK OF

RUSSIA AND FINANCEMINISTRY.  THOSE RESERVE ASSETS ARE

COMPRISED OFMONETARY GOLD, SPECIAL DRAWING RIGHTS, THE

RESERVE POSITION INTHE IMF AND OTHER LIQUID FOREIGN

CURRENCYASSETS.  THE LATTER INCLUDE SHORT-TERM

DEPOSITS INNONRESIDENT AND RESIDENT BANKS, BALANCES IN

CURRENT ACCOUNTS,FOREIGN GOVERNMENT SECURITIES, REPO

AGREEMENTS WITHTHESE SECURITIES MADE WITH

NONRESIDENTS, ANDOTHER LIQUID ASSETS (ACCRUED INTEREST

ON THESE ASSETS IS NOTINCLUDED).  MONETARY GOLD IS

EVALUATED AT USD300PER TROY OZ.  FOREIGN CURRENCY

ASSETS ARE CONVERTEDINTO US DOLLARS ON THE BASIS OF

THE CROSS RATES OFFOREIGN CURRENCIES TO THE USD,

CALCULATED USING THEOFFICIAL RATES OF THE RUBLE TO

THESE FOREIGN CURRENCIES,SET BY THE CBR.

 

6. MONETARY BASE(M1) IS COMPRISED OF CASH AND RESERVES

OF COMMERCIAL BANKSON DEPOSIT IN THE CBR.  IT IS THE

BASIC PART OF THEMONEY SUPPLY (M2).

 

       7.LOMBARD CREDITS, DISTRIBUTED THROUGH AUCTIONS, ARE

AIMED TO PROVIDE THELIQUIDITY TO THE BANKING SECTOR.

THESE CREDITS AREEXTENDED TO BANKS ON THE BASIS OF

COLLATERAL (T-BILLS,OR MORE RECENTLY, SHARES).