Pinto, BrianUlatov, Sergei2012-08-132012-08-132010-10https://hdl.handle.net/10986/10153In 1998, the Russian Federation experienced one of the most severe emerging market crises of the 1997-2001 periods. It occurred less than six months after the attainment of single-digit inflation, which was supposed to launch the economy onto a sustainable growth path. This note sets out why that occurred and discusses the lessons learned.CC BY 3.0 IGOARREARSASSET STRIPPINGAUCTIONSBAILOUTBAILOUTSBALANCE-OF-PAYMENTS CRISESBASIS POINTSBOND YIELDBUDGET BALANCECAPITAL FLOWSCENTRAL BANKCENTRAL PLANNINGCORPORATE GOVERNANCEDEBT BURDENDEBT CRISISDEBT ISSUANCEDEBT OBLIGATIONSDEBT SWAPSDEFICITSDEVALUATIONDEVELOPING COUNTRIESDISBURSEMENTDOMESTIC CURRENCYECONOMIC GROWTHECONOMIC OUTCOMESECONOMIC POLICYECONOMIC RESEARCHECONOMIC VOLATILITYEMERGING MARKETENTERPRISE RESTRUCTURINGEUROBONDEXCHANGE-RATEEXPENDITUREEXTERNAL DEBTFEDERAL RESERVEFEDERAL RESERVE BANKFINANCIAL ENGINEERINGFINANCIAL LIBERALIZATIONFINANCIAL SITUATIONFINANCIAL STABILITYFINANCIAL SYSTEMFISCAL DEFICITFISCAL DEFICITSFIXED EXCHANGE RATEFOREIGN EXCHANGEFOREIGN EXCHANGE RESERVESFOREIGN PORTFOLIOFOREIGN PORTFOLIO INVESTMENTFORWARD RATESGDPGLOBALIZATIONGOVERNMENT DEBTGROWTH RATESHEDGE FUNDHOLDINGINFLATIONINTEREST PARITYINTEREST PAYMENTSINTEREST RATE DIFFERENTIALSINTEREST RATESINTERNATIONAL BONDINTERNATIONAL BOND MARKETSLIQUIDITYLOANLOCAL CURRENCYLONG-TERM CAPITALLONG-TERM CAPITAL MANAGEMENTMACROECONOMIC CRISESMACROECONOMIC ENVIRONMENTMACROECONOMIC STABILITYMACROECONOMIC STABILIZATIONMARKET CONFIDENCEMARKET ECONOMYMARKET INVESTORSMONETARY FUNDMONETARY POLICYMONIESMORAL HAZARDNOMINAL EXCHANGE RATENONPAYMENTSOUTSTANDING DEBTOUTSTANDING STOCKPEGPORTFOLIOPOVERTY REDUCTIONPRIVATE INVESTORSPRIVATIZATIONPUBLIC FINANCESRATE OF DEPRECIATIONREAL APPRECIATIONREAL EFFECTIVE EXCHANGE RATEREAL EXCHANGE RATEREAL GDPREAL INTERESTREAL INTEREST RATEREAL INTEREST RATESRENEGOTIATIONRESERVESRETURNRISK PREMIUMSEIGNIORAGESENIOR DEBTSETTLEMENTSSHORTFALLSSOLVENCYSOLVENCY PROBLEMSSOVEREIGN BONDSOVEREIGN DEBTSOVEREIGN RISKSPECULATIVE ATTACKSPECULATIVE ATTACKSSTOCK MARKETSURPLUSESSUSTAINABLE GROWTHSWAPTAXTAX ARREARSTAX RATETELECOMMUNICATIONSTREASURYTREASURY BILLTREASURY BILLSTURBULENT PERIODVIRTUOUS CYCLEWEAK CORPORATE GOVERNANCEYIELD SPREADWorld Bank10.1596/10153