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. Last Updated: 07/27/2016

BUSSINESS WEEK IN REVIEW: january 3 to 9




Budget Relief, Delay


After a two-month postponement, the International Monetary Fund on Thursday approved the release of some $670 million of its $9.2 billion three-year loan to Russia.


The State Duma's deputy speaker said the lower house of parliament is likely to postpone a third reading of the 1998 budget until early February. A best-case scenario would then place a fourth and final reading a week later, with Federation Council and presidential approval to follow and a 1998 budget in place by early March.


Market Movement


So much for a New Year's market rally: Plummeting Asian markets brought Russian shares down 10 percent for the week, and down 7.5 percent so far in 1998.


J.P. Morgan has added Russia to its Emerging Market Index, and now the country accounts for 5.55 percent of that index. Russia's share in J.P. Morgan's Emerging Bond Index Plus rose from 10.68 percent to 14.38 percent.


Nancy Herring, lead manager of the Lexington Troika Dialog Russia Fund, a top-performing U.S.-based mutual fund investing in Russia, has resigned, citing concerns over her contract and the bank's new shareholder, the Bank of Moscow, as well as over conflicts of interest within the Lexington Troika team.


Prime Numbers


Prime Minister Viktor Chernomyrdin said Thursday the Russian economy was on the road to recovery, predicting 2 percent growth in gross domestic product in 1998 and inflation of 5 percent to 8 percent.


The State Statistics Committee projected 1997 GDP growth at 0.4 percent. Annual inflation for 1997 was 11 percent, the committee said, handily beating the 1996 rate of 21.8 percent and logging in as the lowest rate since economic reforms began in 1992.


Russia's redenominated ruble had a quiet New Year's introduction, with few new notes found among the old during their first weeks of circulation.


Russian Oil Watch


New privatization minister Farit Gazizullin offered a new proposal for selling off the state oil company Rosneft, under which a controlling stake of 50 percent plus one share will be offered in a commercial tender with an investment element, and another 46.15 percent will be sold in a series of auctions over the year.


Russia's state-controlled Zarubezhneft said it plans to participate in several major oil and gas projects in Iran, despite U.S. laws that call for sanctions against firms doing business with Iran.


Foreigners In, Out


Germany's Deutsche Bank and Commerzbank and the U.S. Bank of America and J.P. Morgan received preliminary permission from the Central Bank to open subsidiaries in Russia.


The Swedish forestry group AssiDoman halted production at the Segezhabumprom plant in northwest Russia on Thursday after failing to raise enough operating capital to run the plant. The government has vowed to negotiate a settlement to the tax and pension debts for the plant, in which AssiDoman owns 57 percent.


President Boris Yeltsin has signed a decree banning foreign-licensed insurers from insuring the property of Russian companies and individuals, limiting their activities to reinsurance and mutual insurance.


Company News


Aeroflot Russian International Airlines has leased two 777-200 aircraft from Seattle-based Boeing to be delivered in April and October, adding to the eight Airbus A-310s and one McDonnell Douglas DC-1 currently in its 115-aircraft fleet.


The European Bank for Reconstruction and Development will provide a loan worth some $56 million to the Danish makers of Dirol chewing gum to construct a new production site in Novgorod.


From the Hip


Yevgeny Tsimbalistov, the director of the Rossiya Hotel, was shot dead Friday in an apparent contract killing, the third top Moscow hotelier to be assassinated in 1 1/2 years.


Members of the Western business community in Moscow greeted with skepticism a new international accord obligating the 33 signatory countries to adopt anti-bribery legislation by the year 2000. They said the treaty is a step in the right direction.