Accessibility links

Russia: Moscow Doesn't Need IMF Loan Now

  • Sophie Lambroschini

A delegation from the International Monetary Fund has returned to Moscow for two weeks of talks to map out future cooperation between the fund and Moscow. Important differences remain, but RFE/RL's Moscow correspondent Sophie Lambroschini reports that higher oil prices have helped Russia to improve its finances, lessening any immediate need for a new loan. IMF support however is still seen as necessary in any agreement to reschedule Russia's payments of Soviet-era debt.

Moscow, 1 February 2001 (RFE/RL) -- Russia is apparently too rich for IMF help -- but still needs it.

That's basically the message from Russian officials, who say they expect little and want even less from an IMF mission now in Moscow. They say higher oil prices this past year have helped bolster Russian finances and the country is now able -- more or less -- to live off of its own income.

An IMF program, however, would be a prerequisite for negotiations with the Paris Club of international creditors on rescheduling the some $38 billion Russia still owes in Soviet-era debt.

Russia probably will not receive the $1.75 billion IMF loan that it has included in its budget for 2001. But then, Russian officials now say they don't even need it.

Speaking over the weekend at the World Economic Forum in Davos, Russian Central Bank chief Viktor Gerashchenko said that because of this past year's higher oil prices, Russia does not need IMF money this year.

Instead, Russian negotiators are expected to push for an emergency stand-by credit that could be used as an insurance policy in case oil prices drop. The two sides failed to reach agreement in November.

International creditors will be looking for an agreement to provide a basis for rescheduling payments on Russia's Soviet-era debt. Russian Prime Minister Mikhail Kasyanov disappointed international lenders last month by saying Russia would not make this quarter's debt payments.

Troika Dialog analyst Sergei Prudnik says the debt issue should form the main aim of the IMF talks:

"Even if IMF negotiations don't lead to getting money from the IMF, [the negotiations] are still important because an agreement would open possibilities for further negotiations with the Paris Club over restructuring the debt after 2001. In my view, the possibility of restructuring the payment schedule should in principle still be seen as the aim of negotiations with the IMF. [Negotiators should try to make the repayment schedule smoother], especially for 2003 when the main external debt burden falls. Such a restructuring will not be possible without an agreement with the IMF."

Recent pronouncements by Russian officials indicate they still take the debt issue seriously. Last Friday, Deputy Prime Minister Aleksei Kudrin said Russia would try to catch up on its missed 2001 payments and would eventually pay off the $38 billion its owes.

Kudrin was speaking just a few days before the arrival of the IMF mission. His statement was clearly meant to impress the IMF.

But there are still strong obstacles to any agreement, the same obstacles left over from November 2000 -- the last time the two sides tried to agree and failed.

The Financial Times newspaper this week reported the IMF remains concerned over what it sees as growing inflationary pressures. The paper says the fund wants to allow the ruble to appreciate against the dollar and to ensure that any additional budget revenues are used on debt reduction rather than current spending. The Russian government argues instead that allowing the exchange rate to drift would have a negative impact on growth.

The paper also notes that the IMF is concerned about the pace of structural reforms and the absence of restructuring and tighter regulation in the banking sector.

The Russian government has moved along somewhat, with the State Duma studying a blueprint for bank reform that included some amendments that echo IMF requests.

At the same time, however, plans to make Sberbank, Russia's enormous state-controlled savings bank, more competitive and less monopolistic are at a stand-still.

Prudnik says this could be a major point of disagreement.

"For now, it looks as if the Russian government does not want to decrease its influence in Sberbank. So I think there will be quite a harsh discussion of this issue." In general, discussions over reforming the big state-owned monopolies, such as Unified Energy Systems (UES) and Gazprom, are still at the initial stage.

Plans to break up UES unleashed a public row between its boss, Anatoly Chubais, and presidential adviser Andrei Illarionov, and led to accusations of document falsifications. A reform program for UES that was supposed to be outlined by the end of last year has been put off until April.

XS
SM
MD
LG