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Abstract
On 17 August 1998, the Russian Federal Government announced the largest sovereign default in its own history — and one of the largest in world history at that time: it suspended payments on GKO (short-term government securities) amounting to 281 billion roubles for a period of 90 days and allowed the rouble to float freely against the US dollar. The rouble depreciated by 60% within a single month, annual inflation rose to 86% in 1999, and real GDP contracted by 5.3%. This article provides a systematic analysis of three core dimensions of the crisis: the mechanism and economic consequences of rouble depreciation; the GKO pyramid and the failures of public debt management; and the differentiated impact of the crisis on member states of the Commonwealth of Independent States (CIS). The analysis is based on primary data from the Central Bank of Russia, the IMF, the World Bank, and the OECD.
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