Once the USSR ceased to exist, Russian is almost always experienced financial problems.The government desperately needs foreign financing, while foreign debt servicing it could not guarantee.As a result, a huge number of not only external but also internal loans form a large national debt.That this was a prerequisite for the world-famous event went down in history as "Black Thursday" in 1998.
Capacity of public debt, and it all began
According to information provided by the Central Bank of the Russian Federation, at the time of the crisis SMP country corresponded to 24 billion dollars.At the same time the debt to non-residents GKO / OFZ market and the stock market was $ 36 billion.The average size of annual debt to non-residents approached the figure of 10 billion dollars a year.It aggravates the situation a sharp drop in the cost of raw materials in the international market.Lowering touched oil, gas and metals.At the same time, in Asia the global financial crisis.Foreign exchange revenues declined in Russia several times, the dollar in 1998 updated its maximum, and foreign lenders began to experience serious doubts and concerns in terms of providing financial support to the government with an unstable economic situation.
Negative sentiment: it started in July
Despite the critical situation in the country, "Black Thursday" in 1998 has brought speech by Michel Camdessus, the then chief executive of the IMF.Because of his words to the effect that even if all the conditions of the IMF Fund of Russia will not be able to issue a loan of 15 billion dollars that the government requested, anxiety about the devaluation of the currency has become particularly acute.
early July 7 CBR completely stopped issuing loans to financial institutions such as the Lombard.July 9 talks were held, the results of which the State had all the chances of getting a loan in the amount of 22.6 billion dollars.The next day, the United Nations announced that the devaluation will bring the country unprecedented favor, and it is a phenomenon, it is necessary for the economy.
dummy change of sentiment
events that occurred in the country in late July, gave hope that the default of 1998 can not take place.Thus, 29 of the state has been allocated the first tranche of foreign borrowing emergency type.Its size was about $ 14 billion.The threat of devaluation receded.24 of the same month, the Central Bank's refinancing rate was lowered to a value of 60%.A little positive sentiment changed its presentation of Andrei Illarionov, served as director of Economic Institute.He criticized the official policy of the government of the country and insisted on accelerating the devaluation of the national currency.
events of August 1998 - the approach of the crisis
1998 crisis in Russia began to worsen after a lull for 5 August, when the government asked the State to increase the borrowing limit from $ 6 billion to 14. The decision was a clear indication that the country simply does notis able to finance its budget from domestic sources.
early August 6th State was issued the third tranche for the reconstruction of the economy of $ 1.5 billion.Russian debt on the world market have fallen to their lowest values."Black Thursday" in 1998 getting closer and closer.
gradual collapse of the economy
inevitable collapse of quotations of Russian securities held for 11 of August.Shares in RTS dropped per day by 7.5%.This was the reason for stopping trading.During the day, banks continued nonstop to buy foreign currency.In the evening of the same day, when the dollar in 1998 reached its peak, most of the largest banks in the country have stopped all their operations.
August 12 a sharp interest in the currency became a prerequisite to a full stop of the interbank credit market.The liquidity crisis.Banks that need large amounts of funds to fulfill its obligations under forward contracts, are facing difficulties in repayment of loans.CB proinitsiiroval reduction limits for currency biggest commercial banks, which considerably reduced their spending on the maintenance of the ruble.Agency Moody`s and Standard & amp;Poor`s August 13 announced a sharp decline in long-term credit rating of the state.Minister of Finance and Deputy Director of the Central Bank reported in the press that the foreign exchange market and the government bond market from this point will be supported by the bankers.August 14 could be seen on the streets near the banks of the whole queue of depositors who were trying to recover their money.
«Black Thursday" in 1998
black stain on the history of Russia under the name "Black Thursday" meant a technical default of the country and its inability to pay its obligations - either external or internal.August 17, after a speech by Sergei Kiriyenko, occupying the post of head of the government, it became clear that the devaluation took place.He spoke of the activities aimed at the stabilization and normalization of both financial and fiscal policy.
for 90 days was suspended fulfillment of obligations to foreign nationals on loans for transactions within the derivatives market and mortgage manipulation.Completely it stopped trade in T-bills.Russia has moved to a floating exchange rate.After the expansion of the corridor of 6 to 9.3 rubles per dollar to control the situation, the Government was not able to.Dollar in 1998 just two months has increased several times, and in October was 15.9 rubles to the dollar compared with 6 rubles at the beginning of the summer of 1998.
What was going on in the country after defaulting?
After the default in 1998 was officially announced, the banks stopped issuing deposits immediately.The situation is explained by the fact that the obligations of financial institutions are expressed in dollars, and assets - in rubles.If you start issuing deposits in the presence of a devaluation, will form a hole in the sheet, which may jeopardize the entire banking system of the state.
International Organization of Visa Int.blocked bank cards country's largest bank "Imperial".All the rest of the financial institutions were encouraged to refrain from issuing cash on the cards.The high rate of the dollar in 1998 was the basis for a ban on the establishment of a difference between buying and selling currencies for more than 15%.There is a natural selection of financial institutions remain stronger.He was given a waiver by the introduction of temporary administration.Lending to financial administration be subject to transfer them to the government shareholdings.Then there was a decree on removing powers from the Cabinet and the dismissal of the head of state affairs.
Financial losses
real test and new prospects remembered by many residents of the country in 1998.The Russian debt default caused losses in August 96 billion dollars.The loss of the corporate sector amounted to at least $ 19 billion.Commercial financial institutions suffered losses of $ 45 billion.Many experts in the financial world are inclined to believe that these figures are very low.
GDP fell to $ 150 billion.The status of the world's largest debtor was hung on Russia was in August 1998. The ruble has depreciated substantially, and the amount of external debt at the same time is not less than 220 billion dollars.This amount corresponds to 147% of GDP.External debt - is not the only thing that brought 1998.The Russian debt default caused domestic debt.General obligations of the state to the citizens of the country amounted to $ 300 billion, corresponding to 200% of GDP.In the West concentrated about 1.2 trillion dollars, but according to unofficial data from America.A big plus that the country received after the "Black Thursday" - a complete rejection of the economy on the raw material models and the active development of virtually all segments of the activities at the site which until the crisis was imported.
