1998 Russian Financial Crisis and Sovereign Default

On 17 August 1998, Russia defaulted on its domestic debt and devalued the rouble, which lost around two-thirds of its value within weeks. The crisis wiped out much of the fragile middle class that had emerged since 1991 and further discredited the shock-therapy reform programme. The 1997 Asian financial crisis and a slump in global oil prices were significant external contributors, but Russia's own unsustainable short-term debt structure and tax collection failures were widely identified as compounding causes.