The state's repudiation of its obligations on August 17,1998, along with subsequent events (the three-week absence of leaders of the government of the Russian Federation and the Central Bank of Russia [CBR], and the formation of their new leadership over the course of the month), led to a radical worsening of the economic crisis.>sup>1>/sup> It reached its nadir in September, in the first half of which the country's banking system was virtually entirely paralyzed. As a result, settlements among enterprises ceased and payments to the budget were reduced to a minimum. The decline in the GDP in September and October 1998 was 9.9 percent compared to the analogous period of the preceding year, and will not be less than 5 percent for the year as a whole. The corresponding figures for the drop in industrial production are 14.5 percent, 11.1 percent, and 8.0 percent, and in investments 14.3 percent, 11.5 percent, and 7.0 percent. The sole area where the situation actually improved in October was agriculture; the decline slowed from 15.0 percent to 6.7 percent, and the expected annual decline was at the 8 percent level. But the decline in railroad freight traffic in October, on the contrary, accelerated from 15.2 percent to 16.3 percent, and a yearly drop of about 10 percent is being predicted.
