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Russia: Putin Likely To Improve Economy, Says IMF Chief

  • Andrew Tully



The leaders of the World Bank and the International Monetary Fund (IMF) have expressed hope that Vladimir Putin can straighten out Russia's economy once he is inaugurated as president on May 7. But RFE/RL's Andrew F. Tully reports that unlike the head of the World Bank, the IMF's acting chief seems to have unqualified optimism in Putin's abilities.

Washington, 14 April 2000 (RFE/RL) -- The acting chief of the International Monetary Fund (IMF) has high praise for Russian President-elect Vladimir Putin's ability to put his country's economy on the right track.

Stanley Fischer told a news conference in Washington on Thursday that solving Russia's economic troubles will not be easy. But the IMF's acting managing director said he believes Putin is the right man to deal with these problems.

"As you know, I returned last week from a visit to Russia where I met with President-elect Putin. We should not underestimate the challenges that face Russia. But I came back impressed with the increasing extent of the consensus there on the need to restart the reform program and the political conjuncture in Russia that should make that possible."

In October, the IMF suspended new loans to Russia pending structural changes in its banking and legal system. On 13 April, Fischer expressed hope that the loans could resume before long.

"I hope we can renew our support for Russia soon as the necessary policies begin to be put into effect, and the meeting with President Putin and other officials certainly gave hope that that will be possible."

Fischer made his remarks at a news conference in Washington where the IMF and its sister organization, the World Bank, are preparing for their annual spring meetings.

A day before the IMF leader's news briefing, World Bank President James Wolfensohn also said Putin appears to be the right man to improve Russia's economy. But Wolfensohn stressed that a final judgment must await specifics of the Russian president's economic plan. That will not come until after his inauguration on May 7.

But Fischer showed no such reserve. He referred to his recent visit to Moscow, and said he had noted an important change there.

"I sensed a much greater consensus on what needs to be done, and a political setting in which it seemed the government -- the president -- had the ability to do that to get it through."

The IMF leader gave no details of his meetings with Putin and Viktor Khristenko, Russia's deputy prime minister for finance. But his praise for Putin's approach to improving the country's economy was enthusiastic.

"In my discussions with the president, it seemed that what he wanted to do was very much what we would like to support."

Later, however, Fischer tempered his remarks by outlining new procedures that the IMF will be taking soon to prevent abuse of IMF loans. Russia has been accused of mishandling IMF money. And the fund has accused Ukraine of misrepresenting its cash reserves in order to secure an IMF loan that it would not have received otherwise.

Fischer said that as of the middle of this year, the central bank of every country applying for an IMF loan must undergo an independent audit "that meets international standards." He said the IMF will review the central bank's procedures, management and its relationship with the current government. If it finds problems, the IMF will conduct what Fischer called an "on-site review" of the central bank and help the country correct the situation.

Fischer did not name either Russia or Ukraine when discussing the IMF's new procedures for safeguarding its financial resources. But he made his displeasure clear.

"The number of occasions on which the proceeds of IMF loans are misused, or when countries obtain loans giving -- having given us false information, is small. That's a rare outcome. But any such occasion is an abuse of the trust on which this institution is based and has to be taken with the utmost seriousness."

The formal meetings of the IMF and the World Bank's 182 member nations do not occur until April 16. But many delegates already have arrived in Washington, where the bank and the fund have their headquarters, and are consulting informally.

The spring meetings are held to discuss the agenda for the more comprehensive fall gathering of the World Bank and the IMF. They also offer an opportunity for the institutions to release reports on the world economy.

On 10 April, the IMF released a study titled "World Economic Outlook," which cited promising prospects for an improved global economy. On Thursday, Fischer commented on that report.

"It's sufficient to say that the world economy is doing better, much better than anyone hoped a year ago with growth strengthening and with inflation remaining subdued, with the challenges being the rebalancing of global growth and the unwinding of current account imbalances."

The spring meetings of the World Bank and the IMF usually draw little media attention. But this year, members of advocacy groups are promising massive protests in hopes of preventing Sunday's meeting. Similar demonstrations succeeded in severely disrupting the meetings of the World Trade Organization in Seattle last autumn.

Local police have used barricades to block off the area around the World Bank and IMF buildings, which are across the street from each other. So far, there has been only one disruptive protest in which seven demonstrators were arrested.

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