quality:corruption, structural:expansion, structural:reformatting, structural:summarization
1996–1999: Second term

Yeltsin underwent emergency quintuple heart bypass surgery in November 1996, and remained in the hospital for months. During his presidency, Russia received US$40 billion in funds from the International Monetary Fund and other international lending organisations. However, his opponents allege that most of these funds were stolen by people from Yeltsin's circle and placed into foreign banks.

In 1998, a political and economic crisis emerged when Yeltsin's government defaulted on its debts, causing financial markets to panic and the rouble to collapse in the 1998 Russian financial crisis. During the 1999 Kosovo War, Yeltsin strongly opposed the NATO military campaign against Yugoslavia, and warned of possible Russian intervention if NATO deployed ground troops to Kosovo. In televised comments he stated: "I told NATO, the Americans, the Germans: Don't push us towards military action. Otherwise there will be a European war for sure and possibly a world war." Yeltsin said that NATO's bombing of Yugoslavia "trampled upon the foundations of international law and the United Nations charter".

On 9 August 1999, Yeltsin fired his Prime Minister, Sergei Stepashin, and for the fourth time, fired his entire Cabinet. In Stepashin's place, he appointed Vladimir Putin, relatively unknown at that time, and announced his wish to see Putin as his successor. In late 1999, Yeltsin and U.S. President Bill Clinton openly disagreed on the war in Chechnya. At the November meeting of the Organization for Security and Cooperation in Europe, Clinton pointed his finger at Yeltsin and demanded he halt bombing attacks that had resulted in many civilian casualties. Yeltsin immediately left the conference.

In December, whilst visiting China to seek support on Chechnya, Yeltsin replied to Clinton's criticism of a Russian ultimatum to citizens of Grozny. He bluntly pronounced: "Yesterday, Clinton permitted himself to put pressure on Russia. It seems he has for a minute, for a second, for half a minute, forgotten that Russia has a full arsenal of nuclear weapons. He has forgotten about that." Clinton dismissed Yeltsin's comments stating: "I didn't think he'd forgotten that America was a great power when he disagreed with what I did in Kosovo." It fell to Putin to downplay Yeltsin's comments and present reassurances about U.S. and Russian relations.