Opposition grows to Yeltsin's economic reforms

Gennady Zyuganov, the leader of Russia's Communist party - the biggest parliamentary party - yesterday launched a stinging attack on President Boris Yeltsin and condemned foreign investors for helping to prop up his "discredited" regime.

His criticism came as Russia absorbed the consequences of the government's decision to float the rouble.

Mr Zyuganov's attack and comments from other opposition leaders, who said they would step up their attacks on the government, cast doubts on whether the further legislation needed to overhaul Russia's tax regime and help bring public finances under control would be approved.

"Our president has been totally devalued," Mr Zyuganov said, demanding the president should resign after the country's abrupt change of monetary policy. But Mr Yeltsin ignored these calls yesterday and remained on holiday outside Moscow.

Foreign investors remained nervous about the planned restructuring of the government debt (GKO) market. The benchmark RTS-IF index of stocks fell by a further 9 per cent. On Monday, the government froze the GKO market and said it would announce the terms of a forced restructuring plan today.

Mr Adam Elstein, managing director of the Moscow office of Bankers Trust, the US investment bank, said: "If this restructuring takes place, most foreigners will consider it to be a default. In that case, they would probably rather eat nuclear waste than buy Russian paper again for the foreseeable future."

But the government said it thought it was necessary to consult foreign investors about the debt restructuring.

A spokesman said Boris Fyodorov, the head of the state tax service, promoted this week to deputy prime minister in charge of macro-economic policy, had already invited representatives of J P Morgan and Deutsche Bank for consultations.

The rouble yesterday weakened, with the official exchange rate rising from 6.43 to the dollar to 6.88. But the unofficial rates available from Russian banks and at street exchanges were far higher. Brunswick Warburg, a Moscow-based investment bank, surveyed a string of banks and found the average quoted rate fell back slightly yesterday to 8.55. The bank suggested that the tight money and credit policies being pursued by the central bank were restraining the fall in the rouble.

Mr Fyodorov said he would meet foreign investors soon to explain the government's position. "I see my task as defending the interests of citizens to the utmost and enabling Russia to restore the stability of its financial position," he said.

"We will make every effort to preserve the positive tendencies in collecting taxes and to prevent a panic of the population. The state has all the means and possibilities to achieve this."

Mr Boris Nemtsov, deputy prime minister, forecast that the fluctuations in the unofficial rate for the rouble would be brought under control within a week. `We do not intend to bring down the rouble. The government and the central bank are controlling the course of the rouble every day, he said. - (Financial Times Service)

The speaker of Russia's lower house of parliament, the Duma, warned yesterday there could be a fresh devaluation of the rouble within two months, the news agency Interfax reported.

Duma speaker Mr Gennady Seleznev also cast doubt on the ability of the government's anticrisis package to stabilise the country's teetering economy.