Central Bank Heir: No Major Changes

The man tapped by President Vladimir Putin to be the next Central Bank chairman told lawmakers Monday that he would essentially follow the policies of his predecessor and vowed to maintain the stability of the ruble.

Sergei Ignatyev, nominated by the president Friday to head the bank after the abrupt resignation of Viktor Gerashchenko, told the State Duma's budget and banking committees that current monetary and exchange rate policies were "well-grounded" and wouldn't be tinkered with in "the next few months."

Ignatyev, the first deputy finance minister, said that he saw no reason to alter the government's ruble and inflation targets for 2002. The government considers taming inflation a priority and has targeted a range of 12 percent to 14 percent this year from 18.6 percent in 2001. Inflation unexpectedly soared to 3.1 percent in January and 1.2 percent in February, but Ignatyev said he still expects the target to be met.

Ignatyev also defended the government's ruble target of an average rate of 31.5 to the dollar for the year.

In an interview published in the Vremya Novostei newspaper Monday, he called unfounded fears that there might be an attack on the ruble by speculators hoping to take advantage over the uncertainty inherent in changing leadership at the Central Bank.

"If somebody wants to profit from the current, very temporary instability, I can say that the [Central Bank] has huge foreign exchange and gold reserves and it can and, to be more precise, must do everything to maintain the ruble's stability," he said, adding that "there is no doubt that the [Central Bank] can maintain the stability of the ruble."

The ruble remained almost unchanged Monday, losing just 4 kopeks to close at 31.1119 to the dollar in unified trading -- less than the 5 kopek to 7 kopek loss generally expected by traders, Reuters reported.

Members of the two key Duma committees voted 22-0 to approve Ignatyev's nomination and recommended that a full vote take place in the lower house of parliament Wednesday. The date is to be confirmed by the Duma Council of senior lawmakers Tuesday, Reuters reported.

While Ignatyev may largely follow the policies of Gerashchenko, there is at least one key issue where the two disagree: Central Bank accountability to the government and parliament.

Gerashchenko, who has long irritated investors for his refusal to institute meaningful reforms, went out in dramatic fashion Friday in an unscheduled appearance in the Duma during what was supposed to be the second and crucial reading of a draft law on the Central Bank. Gerashchenko lambasted the bill, which was co-authored by Ignatyev and designed to increase the transparency and accountability of the bank, calling it "stupid."

The differences between the two men do not end there. Whereas the flamboyant Gerashchenko, who never shied from uttering a quip, once asked a conference of regional officials, "what idiot would work for $1,000?" Ignatyev seems immune from exploiting the perks of power.

"At least one fact about him is clear so far: He does not take bribes and does not care about money in general," said Mikhail Matovnikov, deputy director general of the Interfax Rating Agency, which monitors the banking industry.

"For Russia it is so unique and surprising in a good sense, like marrying for love," Matovnikov said.

Most people had never heard of Ignatyev before Friday, when the 54-year-old was suddenly thrust into the media spotlight as the designated heir of Gerashchenko, who has run the Central Bank since the 1998 financial crisis.

Despite being near the center of power for the past decade, Ignatyev is little known outside the world of economics, where he has a reputation of being a serious, diligent and intelligent professional.

According to people who worked with Ignatyev in the Finance Ministry, he is old-fashioned and averse to new technology. In an age of multicolored multimedia presentations, he still prefers every report to be prepared in black and white and on A4 paper and refers to PowerPoint presentations as "children's drawings."

He is also reluctant to give interviews, telling an inquisitive reporter on at least one occasion to send questions to him through the post.

He also opposed increasing the transparency of the various departments of the Finance Ministry, and was reluctant to provide more detailed figures on internal and external debt and budget revenues.

Nevertheless, "Ignatyev is the best candidate for this post," said former Prime Minister Yegor Gaidar.

"He is a very qualified and honest man," Gaidar, who now heads of the Institute of Transition Economy and is a member of the Duma's budget committee, told Echo Moskvy on Monday. "I expect some policy changes from him, but don't anticipate any revolutions, which we don't need."

Gaidar invited Ignatyev into his democratic and reform-oriented government in 1991 as deputy finance minister.

Born in Leningrad in 1948, Ignatyev graduated from Leningrad Energy College in 1967. He worked for five years as an electrical engineer in Leningrad before leaving for Moscow to study economics at Moscow State University, where he received his PhD in 1978.

Before starting his career in government he was a senior lecturer on economics at the Leningrad Institute of Soviet Commerce.

Unlike other new members of Putin's team, he had no relations with the St. Petersburg administration when Putin was a deputy to former Mayor Anatoly Sobchak.

Before moving to Moscow, he was not known to be associated with any current members of the government, including Finance Minister Alexei Kudrin, who lobbied aggressively for his appointment as Central Bank chairman.

Ignatyev was the deputy chairman of the Central Bank during Gerashchenko's first stint as chairman in 1992-93, but was forced out for being part of the "too-liberal Gaidar team," one former official said.

He joined the Finance Ministry again in 1993 as a deputy minister and in 1997 was promoted to first deputy with a wide range of responsibilities. He also worked as an economic adviser to President Boris Yeltsin in 1996-97.

Since 1997, he has been involved in almost every major issue at the Finance Ministry: internal and external debt, budget revenues, international financial organizations and macroeconomic policy.

He also headed campaigns against tax-evasion schemes used by big oil companies, established good relations with the IMF and the World Bank, and was responsible for macroeconomic stability.

Despite his credentials, however, most analysts say his success or failure will depend on the people he surrounds himself with at the Central Bank.

"Although Ignatyev will face incredible difficulties replacing the present team, we hope for progress on banking reform as soon as he has recruited a new one," said Oleg Vyugin, chief economist at Troika Dialog and a former deputy finance minister.