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Russia: Latest IMF Drawing For Russia to be Delayed

  • Robert Lyle



Washington, 25 October 1996 (RFE/RL) - The scheduled Russian drawing this month of about $320 million from its International Monetary Fund (IMF) loan is expected to be delayed several weeks because the IMF's review team has been unable to complete its regular review and discussions in Moscow this week.

It will be the second time this year that a monthly drawing from the three-year loan from the fund has been delayed because of problems with the Russian economic situation. The complete loan package totals just over $1 billion.

In July, the traunch was delayed because government tax collections had fallen to barely 50 percent of budget projections and the shortfall was causing the budget deficit to balloon.

Earlier this week, Russian Finance Minister Alexander Livshits told a Duma committee that tax revenues were still not over 70 percent. Presidential Chief of Staff Anatoly Chubais, a member of the recently created special tax commission, said the government was going to be "tough" with companies that were avoiding taxes and a day later, the government announced it would start bankruptcy proceedings against four firms it says owe large sums in back taxes.

The July drawing was released in August after the IMF and Russian officials worked out a plan for improving tax collections. But apparently there was some misunderstanding on that plan because in a statement released Thursday, the Russian Central Bank said there were "differences of opinion" on the "temporary timetable" for measures the two sides had agreed were necessary to get budget revenues flowing again.

The Central Bank statement said there were other problems as well. It said there were differences over the "interpretation" of what it calls measures adopted "to defend" the Russian domestic alcohol market -- an import tariff that a number of countries, including Poland, have said would virtually cut off foreign suppliers of vodka and other alcoholic beverages.

The statement as well said there were IMF concerns on whether the new rules for non-residents to buy Russian government bonds and other debt instruments meet the requirements of the fund's basic charter.

The bank says the IMF review team is leaving Moscow today, but has agreed to resume discussions in the first two weeks of November. The statement indicates, however, that it is Moscow that has work to do between now and then. It says the discussions will resume "after the Russian side prepares additional materials which will make it possible to reach agreement on the issues."

IMF officials in Moscow and Washington have declined to make any comment on the situation, although privately they point at the Central Bank statement as accurately describing the situation.

The fund will make no formal decision to delay the October drawing. Under the rules of the extended facility loan approved last spring, each monthly traunch can be released by the IMF's Board of Executive Directors only after receiving a report from the review team. Without that completed report, the question of disbursing the next traunch does not even go to the board for discussion, so the drawing cannot be activated.

IMF officials and the central bank's statement note that by and large, Russia is meeting the conditions of the loan package. "Russia is adhering to key target indicators in the parts of the agreed program covering monetary and credit policy and the budget deficit, making it possible to keep the inflation rate at a stable and low level," the bank said.

IMF, World Bank and private western investors and companies say Russia must move quickly to reform its tax system -- not only to collect the taxes owed, but to encourage voluntary payment by making taxes more equitable and fair for businesses. Private groups, such as the U.S.-Russia Business Council say that until Moscow adopts an equitable -- and fair -- system of business taxes, it cannot expect to move fully into the global economy.
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