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Russia Won't Honor Pre-1993 Ruble Bills : Currency: Citizens have two weeks to trade up to about $35 worth of old notes for new ones.

July 25, 1993|SONNI EFRON | TIMES STAFF WRITER

MOSCOW — The ailing ruble, still the butt of unkind jokes two years after the collapse of communism, suffered another jolt Saturday when Russia's Central Bank abruptly announced that all ruble bills issued before 1993 will not be honored as of Monday.

Russian citizens have two weeks to exchange up to 35,000 of their old rubles (about $35) for 1993 ruble bills. Anything over that amount may be deposited in a state savings bank--but the funds may not be withdrawn for six months, by which time the annual inflation rate of 2,500% may have reduced their value to roughly zero.

Foreigners have one day--Monday--to turn in up to 15,000 old rubles (about $15).

The bank decree is intended to curb Russia's galloping inflation, stabilize the ruble's value against the dollar and eliminate the large number of counterfeit bills now in circulation.

But it could wipe out whatever ruble savings ordinary Russians still have left after three years of inflation, and deepen their mistrust of the government and its banks.

"Nothing has changed at all--they (the government) still have the same old swinish attitude toward us," snarled one young man in a bread store. He was one of thousands who went out Saturday to try to spend their old rubles before they become worthless.

As expected, President Boris N. Yeltsin announced Saturday that he would cut short his vacation and return to Moscow today to try to deal with the conservative Parliament that used his absence to try to dismantle many of his reforms. Lawmakers have voted to hobble Yeltsin's privatization program, double his budget deficit and fire two top Yeltsin aides who have been accused of corruption.

On top of these woes, Yeltsin will now come home to hear more grumbling from those unhappy with the new currency decree. Still, it was unclear how much the decree would actually hurt ordinary Russians.

On the hot, humid streets of Moscow on Saturday, several young people laughed scornfully at the notion that they would keep spare cash in anything but dollars. And several older people said they were too poor to have more than $35.

"I make $15 a month, my husband makes $20 a month, and we have three kids," said Raya Yermillova, the bakery cashier. "We don't have enough money to have any extra lying around."

The state-run bread store was still accepting the old rubles Saturday because state enterprises will be permitted to exchange their cash reserves for new ones.

But the word was nyet at the privately owned kiosks, the small stalls that sell everything from chocolate bars to cognac, socks, sex aids, electronics and Barbie dolls.

"It's a fight with inflation--at our expense," said kiosk clerk Vycheslav Loktyonov, who heard about the decree only on Saturday afternoon--after the banks had closed for the weekend.

Half a dozen seemingly innocent customers tried to pawn off old bills for their purchases, but Loktyonov inspected the date on each. One customer who handed him a crisp new 1,000-ruble note was given some of her change in old bills. Loktyonov looked sheepish, then shrugged.

"I have to get rid of them somehow," he said.

Pavel G. Bunich, head of the Russian Entrepreneurs Union and an adviser to Yeltsin, denounced the move as "a weak anti-inflation measure" that would merely force Russians to spend the next two weeks standing in horrific lines at the bank cursing the Yeltsin government.

Lawmaker Pyotr Filippov, another Yeltsin ally, said the measure "could conclusively kill all faith in the ruble."

Besides savers, speculators and merchants with large cash reserves, those worst-hit by Moscow's monetary decree may be the other former Soviet republics.

Thanks to the unyielding inflation, the Russian Central Bank has printed truckloads of larger-denomination bills this year. Only about 10% of the bank notes circulating in Russia were printed before 1993, Central Bank Deputy Chairman Alexander A. Khandruyev told the Ostankino television network.

Much of the rest is in "the near abroad"--the 14 other former Soviet republics, some of which are illegally dumping their rubles in Russia when they introduce new currencies of their own, Russian officials have said.

Sergei Loiko, a Times Moscow Bureau reporter, contributed to this report.

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