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Russia: IMF Imposes Requirement Of Reform As Condition For Loans

  • Floriana Fossato



Moscow, 21 July 1998 (RFE/RL) -- The decision of the International Monetary Fund to approve new loans to Russia this year on condition that the country implements major reforms is certain to put pressure on Russian authorities to do serious work during the months to come.

The IMF decided yesterday to release the payment of a $4.8 billion tranche, with $800 million being held up until September, when the release of a new tranche remains conditional on the implementation of broad economic and fiscal reforms that the government and president Boris Yeltsin have promised, but that the parliament has shown no intention to back.

IMF First Deputy Managing Director Stanley Fischer said after the IMF Board of Directors meeting yesterday that the Fund welcomed the "up front actions" -- that is decrees -- taken recently by Yeltsin and his government to overcome the parliament's reluctance to back the anti-crisis program. But Fischer also noted that the parliament failed to act on a number of key fiscal bills.

Measures approved by Yeltsin during the last three days include a decree doubling and quadrupling land tax rates, another one setting value-added tax at a standard 20 percent for all goods and mandating that VAT be paid upon delivery of goods.

The government issued directives revising the list of products subject to VAT below the standard rate and rising all import duties by 3 percent. Both measures are intended to boost budget revenues and support Russian industry.

In another important move, Yeltsin at the week-end vetoed two laws approved the same week by legislators. The laws would have reduced the profit tax for enterprises from 35 percent to 30 percent and more than halved excise duties on oil.

Russian officials have said that the measures would increase revenue for federal and regional budgets by some 50,000 million rubles, whereas the legislation approved by parliament last week would have raised revenue only by half that amount.

The Duma deputies have already indicated that they intended to contest the legality of some of these decrees. The Russian constitution says that the president is not to issue decrees contradicting existing federal laws.

Duma Budget committee chairman Aleksandr Zhukov said yesterday that "regardless of pressing economic and political reasons, the president and the government should not violate the Constitution."

And the communist chairman of the Duma Security committee, Viktor Ilyukhin, said that Yeltsin's move would give more arguments to a parliamentary efforts to impeach the president.

But Duma Speaker Gennady Seleznev, a moderate communist, welcomed the government's decision to introduce a new three percent duty on all imports. He also said that he backed Yeltsin's move to issue more decrees to push thought the anti-crisis measures.

The Duma's Summer recess is scheduled to run through early September. But Prime Minister Sergei Kiriyenko has already urged deputies to convene a special session on August 10 to consider new draft laws on economic and fiscal policy. This call has received IMF's support.
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