Stock markets are set for a nervous week following the Russian President, Mr Boris Yeltin's shock decision to sack his Government and in the light of uncertainties facing many markets in Latin American and Central and Eastern Europe.
Mr Yeltsin's move yesterday came as the final details of a complex debt restructuring plan were being hammered out.
The change of Government will lead to fresh doubts about Russia's ability to get to grips with its ever-deepening economic crisis, particularly if there is a delay before the new government takes up the reins. Investors had been expecting key details of the debt restructuring plan today, but it was unclear last night if this would now happen.
However, a spokesman for Deputy Prime Minister Mr Boris Fyodorov, who had been put in charge of working out the details of the debt deal, said the terms will still be announced today. "I think that it will most likely take place," he said.
The debt restructure was to have involved swapping $40 billion of short-term GKO t-bills and OFZ bonds with maturities to the end of 1999, which are expensive for the government to service, with cheaper longer-term paper.
The aim is to decrease the cost of servicing Russia's domestic debt, which threatened to bankrupt the country. Mr Fyodorov's spokesman said the sacking by President Yeltsin of the Prime Minister, Mr Sergei Kiriyenko, and his replacement with the former Prime Minister, Mr Viktor Chernomyrdin, should not mean the government stopped work and that an announcement on the debt deal could be expected today. On Friday billions of pounds were wiped off the value of world stock market shares as concern grew about Russia's financial woes and volatility on Wall street continued. European markets dropped and shares in Dublin suffered heavily. Almost £1.3 billion was knocked off the value of Irish share prices.
The predictions that the Russian crisis could worsen, apparently well-founded, and the US missile attacks in Sudan and Afghanistan increased nervousness among investors. The German equity market took the biggest hit, because of its closeness to Russia, with the DAX dropping almost 6 per cent.
Attention will also focus today on a number of emerging markets where investors fear currencies will be devalued. They include Venezuela. Yesterday, the country's finance minister said there will be no sudden devaluation of Venezuela's currency, but the government will allow minor devaluations through the market. Other countries whose currencies could be under pressure include the Czech Republic and Poland.
