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Russia: IMF's Number Two Arrives To Start Tough Discussions On New Credits

  • Robert Lyle



Washington, 23 June 1998 (RFE/RL) -- The arrival in Moscow of the International Monetary Fund's number two official, Stanley Fischer, marks the real start of the tough discussions on just how much new financial assistance Russia can hope to get from the IMF soon.

First Deputy Managing Director Fischer has become the fund's disaster relief point man. He spearheaded the fund's first moves to help Mexico a few years ago and took the same role at the start of the Asian financial crisis last year.

Now, he has traveled from Ukraine -- where he apparently helped finalize an agreement in principle for a long-term loan program -- to join the talks on what Russia needs and what it can hope to get.

Officially, IMF officials say Fischer is in Moscow to get to know the government's new economic team and participate in the review of the current loan program being conducted by the regular IMF mission.

But Fischer has achieved a certain status within the fund as the hard-headed, no-nonsense official who has no trouble telling officials in financially troubled countries exactly what they must do to get further IMF help. As importantly, he also has no qualms telling those same officials the limits of what the fund might be willing to do in offering help.

In an organization which often must deal with the politically delicate and difficult job of telling member countries -- who in the end are the owners and bosses of the organization -- things they often don't want to hear, Fischer has taken on one of the most difficult jobs.

Managing Director Michel Camdessus is a masterful politician who has achieved a reputation of being able to tackle the most delicate political situations -- applying diplomacy in a way that leaves few feathers ruffled. He can be tough, too, but has apparently come to value Fischer's demonstrated ability to be the counter-balancing "tough guy" when member nations in serious trouble are reluctant to swallow bitter medicine.

Russia is in just such a situation -- unable to get its tax and collection system reformed and working to allow release of the next tranche of its current IMF loan, while facing the need of additional financing to protect against further assaults on the value of the ruble.

IMF officials say the fund's Board of Executive Directors last week postponed taking up release of the latest nearly 700 million dollar drawing from the fund to give Russian officials time to complete "certain prior actions" this week.

Prior actions is IMF code for steps a government has agreed to take, but has not yet put into effect. Prime Minister Sergei Kiriyenko says his government's latest austerity package, to be released soon, is aimed at dealing with rampant tax evasion.

But in addition, Russian officials say they now could use between $10 billion and $15 billion in new, short-term stabilization funding from the IMF to protect the Russian Central bank's reserves in supporting the value of the ruble.

Kremlin spokesman Sergei Yastrzhembsky said some of the conditions the IMF wants to impose for the credits would be difficult for Russia to accept. He did not elaborate. But apparently Russia is finding that, as Indonesia, South Korea and other Asian nations learned in recent months, Fischer pulls no punches when he talks emergency rescue programs.

Fischer quipped to reporters in Sao Paulo, Brazil last Friday that $10 billion to $15 billion was "a lot of money, more than the IMF can give to one economy."

IMF officials played down the implication that anything has been decided with Russia on a new loan. But they also acknowledged that the real extent of Russia's needs and the IMF's willingness to help will only be clear after Fischer completes his talks in Moscow.
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