Deputy finance ministers from the Group of Seven (G7) major industrial nations gathered in Paris issued no statement concerning Russia on Tuesday. This contributed to a fall in Russian stocks and bonds.

In New York, Russian "PRIN" bonds were down 3/8 to bid 56-5/8 and volume remained thin as investors awaited the G7 statement on Wednesday. After US markets had closed, an international monetary source in Paris said the G7 would not issue an official statement Wednesday.

Experts interviewed earlier in the day said the markets expected such a statement from the G7. They differed on how specific the comments should be to head off bearish sentiment in Russia's financial sector, recently shaken by a ruble crisis which tripled key interest rates to 150 per cent in late May.

InNew York, Salomon Smith Barney's head of emerging markets research Desmond Lachman said at the minimum the G7 should unambiguously support the stability of the ruble, which came under intense pressures as investors feared a possible devaluation. "They need to make it clear that they would be working with the Russians to provide financial support as needed to defend the currency through multilateral institutions," he said. Russia's financial crisis eased after US president Bill Clinton on May 29 welcomed Russia's fiscal reform strategy and said Washington would encourage "strong IMF and World Bank engagement in support of reform."

Anders Aslund, a former adviser to the Russian president Boris Yeltsin said a statement supporting the ruble would be helpful, but was not necessary.

"The best scenario would be a firm commitment (by the G7) of four to five billion dollars in IMF and World Bank money, and the weakest no statement at all," said Aslund, a senior associate of the Carnegie Endowment in Washington."Most likely is something between the two scenarios."

Goldman Sachs vice-chairman Robert Hormats said markets will want to see the G7 commit as much as possible to support the ruble.

But he added the key to strengthening markets was to have Russia demonstrate a boost in tax collections that would come from follow-through and implementation of recent Russian reforms.

"Unless they pick up tax revenues considerably and broaden the tax base, the markets are going to be sceptical of Russian economic policy," he said.

In Moscow, Yeltsin last Friday said Russia had already weathered the worst of the financial storm. Late Thursday, the central bank cut back key interest rates to 60 per cent.

Markets are looking for a G7 commitment to help Russia through a 12-18-month period that it needs to reduce its budget deficit through improvement in tax collection and more effective budget expenditures, said Keith Crane, the head of research at the Plan Econ consultancy, a Washington-based firm. Steven Halliwell, thehead of a company managing Russian securities said the markets were definitely waiting for clarification of what foreign financial support might be forthcoming from the G7 and IMF.

"More important, though, is the renewed commitment of the prime minister Sergei Kiriyenko's government to improve the revenue situation and reduce corruption related to government funds," said Halliwell, chief executive officer of the New York-based River Capital International.