Washington, 5 December 1997 (RFE/RL) -- The head of the International Monetary Fund says Russia's financial situation, while difficult, is not at a crisis point.
IMF Managing Director Michel Camdessus told reporters in Tokyo Thursday that those expecting Russia to join the Asian financial crisis were looking in the wrong place.
"We are not panicking at all," he said. "I don't see the crisis in Asia as the most pressing problem for Russia."
Camdessus was answering in a sense what has become the question around the global financial community -- will Russia be the next country needing an international financial rescue package?
No one can say for sure, of course, but Camdessus reiterated that if Moscow should face such a crisis, the IMF would be there helping as needed.
But Russia's financial leadership, officials of the IMF and the World Bank, commercial bankers, and financial leaders of the world's major industrial nations -- the G-7 -- are quietly working behind the scenes to assure that Russia is not the next nation to have to cry help.
This is the scenario as pulled together by our economics correspondent after talking with a wide range of sources directly involved:
While Russian Central Bank Governor Sergei Dubinin has been rallying the country's bankers to work together to deal with the decline in reserves, First Deputy Prime Minister Anatoly Chubais has been talking with western commercial banks about possible loans of around $2 billion. The money is needed to ease the country through a period when it is trying to pay off huge wage arrears while suffering from the effects of foreign investors pulling their money out of Russian government bonds and notes.
Russia has had a serious problem with tax collections, leaving revenues for the government far below projected levels. It was because of Moscow's failure to get the tax system reformed that the IMF in October delayed release of the expected $700 million tranche from Russia's three-year $10.1 billion loan.
The IMF review team told Russian officials that if they got tax reforms moving by the end of the year, the fund would consider releasing that tranche next February.
The timing was tough for Russia, however, since it came just before the Asian financial crisis sent ripples around the world, causing foreign investors to back away from emerging markets, such as Russia's. That has not only raised markedly the cost of borrowing for Moscow, but left the country short of reserves.
Under quiet pressure from the G-7 countries -- the U.S., Japan, Germany, France, Great Britain, Italy and Canada -- the IMF received two senior Russian financial officials in Washington last week.
The officials told IMF officials that they could put together additional measures to deal with tax shortfalls if the fund would be willing to consider releasing the delayed $700 million drawing before the end of the year.
Fund officials agreed, but insisted that the IMF would not relax its standards just because Russia was running short of cash. Moscow would have to come up with "significant additional measures" in the fiscal area before the tranche could be considered this month.
The only bending to the political pressure from the G-7 nations seems to be that the fund agreed to consider whether the additional measures now being proposed by Russian authorities "go far enough to justify any change in timing," according to monetary sources. They will not insist on waiting to see if they work.
Meantime, the World Bank was able to push ahead two major loans that have long been under development so that they should be ready by mid-month. The two loans -- one a general structural adjustment credit and the other a second loan to push reform of the coal industry -- will total about $1.6 billion.
If everything falls into place, say bank sources, the two loans should go to the bank's board for final approval December 18th, and the first drawings should be released to Russia within hours.
They aren't announcing it publicly, but the international institutions, the G-7 nations and the commercial banks are trying to forestall Russia becoming the next crisis. Private stock and bond analysts in the U.S. on Thursday said the strategy appeared to be working.