Zee Beam News

22.08.2006 Bloomberg - Eight years of prosperity haven't persuaded Russians that good times are here to stay. A public opinion poll published last week by the Moscow-based Levada Center shows that almost half of the nation's 143 million people think a financial crisis is possible in the next 12 months, ignoring a planned $56 billion budget surplus for next year. Millions of Russians had their savings wiped out on Aug. 17, 1998, the third time in less than a decade, when the government defaulted on $40 billion in domestic debt as oil tumbled to less than $14 a barrel. Since then, oil has risen more than five-fold, driving economic growth that has averaged 6.7 percent a year from 1999. "Russians are pessimistic by nature and don't expect anything good to come from life,'' said Nikolai Zlobin, director of Russian and Eurasian programs at the Washington, D.C.-based World Security Institute. "No one believes in the quality of management of Russian authorities or in state statistics.'' 47 percent of the 1,600 people surveyed across 46 regions of Russia said another default was possible within the next year, the Levada poll carried out July 14-17 revealed. 38 percent said it's unlikely. The poll has a margin for error of plus or minus 3 percent. The percentage of citizens expecting an imminent default has held steady at around half since 2002, when the center began polling citizens on the issue. Russians are more trusting of their own currency now than before, after the ruble surged 7.6 percent against the dollar this year. Half of those surveyed recommended holding cash savings in rubles, nearly double the level in 2002. Trust in the U.S. dollar has plummeted, with 9 percent recommending holding the dollar, down from 33 percent in 2002. Russian currency reserves held at the Central Bank leaped from $10.1 billion to $277 billion in the week to Aug. 4, the bank said on Aug. 17. That increase is about 70 percent as large as the country's total reserves eight years ago, when they stood at $14 billion. Foreign debt will tumble to 9 percent of the gross domestic product by the end of the year, a smaller proportion than any of the Group of Seven industrialized nations. Russians' distrust of statistics heralds back to Soviet days, when managers cooked the books to show they had fulfilled or surpassed state production plans amid fear of reprisals.