INDUSTRIAL NATIONS EXPECTED TO DISCUSS RUBLE STABILIZATION

INDUSTRIAL NATIONS EXPECTED TO DISCUSS RUBLE STABILIZATION

The major industrial countries later this month will consider an aid package to Russia that would bolster the ruble and provide stability to battered economies of the republics of the Commonwealth of Independent States, a senior British official suggested Wednesday.

Discussion of a ruble stabilization fund and other forms of economic assistance to Russia are expected to take place in New York Jan. 31 at an emergency meeting of the United Nation's Security Council, currently chaired by British Prime Minister John Major."We're not at the stage yet where we're talking about a stabilization fund, but we're a lot closer. I can see that moving quite rapidly," said the British official.

In December, Russian President Boris Yeltsin asked the Group of 7 leading industrial nations to provide $5 billion for the stabilization fund in addition to $10 billion to $12 billion in funds for buying imports.

The International Monetary Fund's $1 billion stabilization loan to Poland in 1989 was helpful in stabilizing the zloty and keeping a lid on inflation. Mr. Yeltsin, and before him Mikhail Gorbachev, have argued that a similar contribution is required to smooth the transition from a centrally controlled economy to one in which prices find their own level through the market.

Mr. Yeltsin liberalized prices on Jan. 2, allowing producers and shop keepers to set prices at whatever level the market would bear. With the exception of six basic commodities - bread, milk, matches, salt, vodka and energy - prices are no longer controlled by the government and in many cases have risen tenfold. Even for those goods that are still price controlled, the cost to the consumer has soared by some 300 percent to 500 percent.

The inflationary spiral has been further fueled by the Russian government's policy of funding budget deficits by printing more money.

The resulting collapse of the ruble has seen the currency fall from the 1991 official rate of 1.8 rubles to the dollar, to 150 rubles to the dollar.

John Fleming, chief economist at the European Bank for Reconstruction and Development, said a currency stabilization fund would support the ruble only if Mr. Yeltsin's government adopted a more sensible fiscal policy and if the Russian authorities pegged the ruble to the dollar at a realistic rate.

He pointed out that Poland chose a dollar rate which greatly undervalued the zloty and made defending the currency a far easier task.

Whether the Russians would choose the dollar as the anchor for the ruble is also open to question. The Polish economy faced some disruption in 1990, when the dollar fluctuated sharply against the deutsche mark, so the Poles later adopted a basket of currencies - with the dollar comprising roughly half the value of the mix - as the anchor for the zloty.

Mr. Fleming said the Russians might decide to adopt a similar basket of currencies after initially using the dollar to gauge the value of the ruble.