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Russia: Relations With IMF Unclear After Talks

  • Floriana Fossato

Moscow, 10 February 1999 (RFE/RL) -- The status of Russia's relations with the International Monetary Fund is unclear following the departure of an IMF delegation from Moscow on Saturday (Feb. 6).

Russian first deputy prime minister Yuri Maslyukov says he expects IMF chief Michel Camdessus to visit Moscow February 18. The visit, Maslyukov says, could follow another round of negotiations on the release of about $4.6 billion in funds. The IMF team left Saturday after reporting little progress in two weeks of talks.

Maslyukov's statement was later contradicted by deputy finance minister Oleg Vyugin. Vyugin said yesterday the IMF would return to Moscow only after Russia produces a memorandum laying the foundations for a new economic policy.

The IMF itself is noncommittal. The Fund's top Moscow representative, Martin Gilman, says there is an appreciation on both sides that there is no time to lose. However, he says, it's difficult to predict when the next mission would return to Moscow -- or when Camdessus might visit.

Gilman says negotiators are looking for a "comprehensive policy package that the IMF and the international community can support." He says Russian authorities must take steps to bring the fiscal situation under control, increase revenues, control spending and restructure the banking system.

Russia is counting on the IMF funds for reaching revenue targets set out in the 1999 budget. The funds were frozen last year after the country's economic crisis.

Vyugin, who took part in negotiations with the IMF, said the IMF is asking Russia to set a budget surplus this year of 3.5 percent of gross domestic product (excluding debt servicing). The budget foresees a surplus of 1.7 percent.

The budget has been approved relatively smoothly because of the support Russian Prime Minister Yevgeny Primakov enjoys in the communist-dominated State Duma. Legislators, preparing for the December parliamentary elections, however, would be unlikely to agree to further spending cuts, particularly in military and social spending.

Maslyukov says it would be difficult to agree with the IMF demands. He says the Fund's goals of raising revenue and cutting expenses are not feasible.

Vyugin and Finance Minister Mikhail Zadornov, in an attempt to reach a compromise, are said to be preparing a plan by which Russia would increase its budget surplus in each of the next three years.

There is, however, widespread skepticism about the proposal. Most analysts say authorities are now counting on increased Western pressure on the IMF to nudge the Fund into striking a deal with Russia.

In recent days, officials have focused on persuading European leaders to support Russian policies. Italian Prime Minister Massimo D'Alema said after talks with Primakov and other Russian officials yesterday that he supports Russian efforts to win fresh IMF credits.

German Chancellor Gerhard Schroeder is expected to visit Moscow on February 18. Russian media say the government is pinning hopes for further IMF support on the talks. Germany, they say, is the IMF's second largest contributor after the U.S.