vlad.tribnet.com / Issue #158 / Business / Reading article...

A decade ago, a kilo of cheese cost 2 rubles, a kilo of sausage was 2.20 rubles and 10 eggs would set you back a mere 1.14 rubles.

Prices may never again drop to pre-Gorbachev levels (cheese alone now costs about 30,000 rubles a kilo). But the government is attempting to make up for a decade of hyperinflation by lopping three zeroes off the ruble beginning this month.

It may make payday (for those lucky enough to receive their salaries) feel a little less like robbing a Latin American bank. Still, the redenomination of money was greeted with howls of protest last year when it was announced, and not everyone is confident the government will handle things right when it comes to their pocketbooks.

“It’s inconvenient to count money now,” said Svetlana Maksakova, shop assistant at a fur shop called Mink. “I would feel much easier if there were no redenomination.”

The new money — which began appearing on Jan. 1 — comes in bills of 5, 10, 50, 100 and 500 rubles. There will be one- and five-ruble coins, and that forgotten sliver of alloy, the kopek, will return once again.

The size and design of new bills is the same as their thousandfold counterpart, so that a 100 looks nearly identical to the 100,000 ruble note. Coins run from 1 kopeck to 5 rubles.

Salaries will be paid in both new and old bills until July 1, 1998. After that, banks will be required to give out salary money only in new bills.

When the government introduced currency reforms in 1992, citizens had only a few days to exchange their money, and there was a limit on the amount they could exchange. Huge lines formed outside the banks, and some people lost most of their life’s savings. This time, notes Lyubov Maltseva, head of the stocks department of the Central Bank of Russia’s main Primorye office, people will be able to use the old currency throughout 1998.

The memory worries some.

“It will certainly create confusion,” Anatoly Marmarkov, an engineer.

Maltseva said bank accounts will undergo the same process — being divided by 1,000. No abrupt denomination-related changes in the dollar rate are expected, she said. The Central Bank anticipates only a 15 percent deviations in the course of the next three years. (Finance specialists also say that the demand for foreign currency in Primorye has been going down since September.)

Stores are already posting signs in both new and old currencies, and perhaps not surprisingly, some are rounding the figures up in their favor. In one store, you could buy a bottle of beer for either 5,800 old or 6 new rubles. But this is a violation of the law, currency officials say. (The price should say 5.80 new rubles.) Illegal pricing should be reported to the police, said Maltseva.

The Central Bank’s main office’s spokeswoman, Maria Pogodayeva, said pensions in the krai were paid in new bills starting from Jan. 6. In cases where there wasn’t enough new money,officials must get permission from the Central Bank to use old rubles. Those who receive new money should be prepared to get two per cent of it in metal coins. This is obligatory in the first half of 1998.

Starting Jan. 6, all companies were required to keep books in new rubles, according to the first deputy director of the Central Bank’s main office in Primorye, Valentina Panteleyeva. Also, the face value of shares and chartered capital of joint-stock and other companies are being recalculated. Shareholders’ meetings must vote for the changes and record them. Banks and most joint-stock companies will hold their meetings by summer.

The head of the department for regional economic issues and bank capital, Victor Savaley, thinks the redenomination process will be painless psychologically, as the currently circulating bills were introduced only in 1995, and people haven’t become as attached to them as the Japanese are used to their multizero yens.

Before the redenomination, the Central Bank didn’t consult with the International Monetary Fund or other foreign financial consultants. But it did study the experience of countries that recently redenominated currencies, such as Ukraine, Poland, Mexico and France.

Anatoly Medetsky of the Vladivostok News also contributed to this story.