Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Gerashchenko Will Keep Post, Prime Minister Says




Prime Minister Mikhail Kasyanov dismissed talk Tuesday of the imminent sacking of Central Bank Chairman Viktor Gerashchenko and said there was no policy split, though the two men appeared to differ on the ruble.


Kasyanov, who jolted the local foreign exchange market last week by saying the ruble should not strengthen further, said Gerashchenko's dismissal was not on the agenda and the Central Bank would contribute to the government's new economic plan.


Britain's Financial Times newspaper Tuesday quoted a senior government official as saying Gerashchenko might be forced to quit within the next six months as President Vladimir Putin tightened his grip over the country's finances.


"As of today we do not have any problems or differences of opinion [with the Central Bank]. I do not see any reason for any announcements or comments on the matter," Kasyanov said during a visit to the Belarus' capital of Minsk.


"Such a question has not been raised. By mid-June we are going to complete a government program and, of course, the program will include elements of monetary policy. I am sure that the government and Central Bank will find a common language," Kasyanov said.


Gerashchenko once headed the Soviet Central Bank and has dominated monetary policy for much of the post-Soviet era. He laughed off the possibility of his sacking earlier Tuesday.


"For almost 12 years with small interruptions the Central Bank has had four chairmen, while the government has already had nine heads," Gerashchenko told journalists on the fringes of a banking congress.


Gerashchenko, sacked in 1994 after the ruble lost about 30 percent of its value in one day, returned to head the Central Bank after the 1998 financial crisis led to a sharp devaluation in the ruble and a domestic debt default.


He appeared to differ with Kasyanov on Tuesday, saying the ruble should not be artificially weakened for the sake of the budget. He was responding to a statement by Kasyanov last week that further ruble gains would be harmful.


"I understand the position of Kasyanov, with his responsibility for the budget, but essentially to finance budget spending by artificially lowering the ruble is ineffective," Gerashchenko said.


The Central Bank intervened heavily to steady the ruble after Kasyanov's remarks, traders said. The bank set the ruble for Wednesday at 28.29 per dollar after the previous 28.30.


Gerashchenko has another headache: Central Bank and other assets held abroad have been frozen as a result of a lawsuit by a Swiss firm seeking to settle claims against the government dating back to the early 1990s.


Gerashchenko said Monday the Central Bank's Paris subsidiary, Eurobank, would challenge the ruling, which local media said was handed down by a court in Stockholm, Sweden.


Alexander Potyomkin, who was deputy Central Bank chairman until fall 1998, said that in 1991 Noga d'Importation et d'Exportation SA signed a contract with the government for supplying Russia with food and fertilizers in exchange for deliveries of oil. The agreement said Russia waived sovereign immunity rights, which meant Noga could seize state assets abroad if the government failed to honor the contract.