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The East: Russia Ranks As IMF's Largest Borrower In 1997

Washington, 10 September 1997 (RFE/RL) - The International Monetary Fund says Russia was the largest single borrower during the IMF's 1997 financial year which ended April 30.

The IMF says Russia drew about $2.8 billion from the three-year extended loan it took out at the end of the previous fiscal year.

In its annual report released today, the IMF says Ukraine was also a major borrower, drawing about $807 million -- the last of its stand-by loan from the previous year.

Ukraine had hoped to reach agreement on an extended three-year loan of up to $3 billion in the middle of the fiscal year, but IMF officials told Kyiv more of its structural reforms had to be in place first. Meantime, the IMF just last month approved a one-year stand-by program of around $540 million to help Ukraine get through the next few months or until it can qualify for the extended program.

The fund says it approved 28 new programs with countries during the financial year, nearly half of which (13) were with nations from Central and Eastern Europe or Central Asia.

The IMF's Board of Executive Directors said that in their review of the region conducted in March and April, 1997, they "welcomed continued progress" in reducing inflation and resuming growth among the nations in transition.

The 24-member board, representing the large nations individually and the smaller countries in groups, conducts the IMF's daily business and must give its approval to all lending programs.

The board noted in the annual report that the progress by those countries which undertook reforms earlier and more sharply continued to be far better than for those countries which instituted reforms later and with less commitment.

It cautioned that the "slow pace of structural reform in several transition countries could jeopardize the achievements of (their) stabilization policies."

The IMF Board did not name any specific countries, but pointed out that sustained economic grow requires well-functioning market-based institutions, and an efficient state administration of the public business. That includes fiscal transparency, fair but effective tax collection, strengthened property rights and adherence to the rule of law.

The board emphasized too that in all the transition economies, including the most advanced, "much remained to be done to complete the process of structural reform." It said the restructuring and privatization of key enterprises and reorganization of the banking sector remained two of the largest needs throughout the region.

The IMF's First Deputy Managing Director, Stanley Fischer, says that despite difficulties, he believes the most advanced nations of the group -- Hungary, Poland and the Czech Republic -- are already becoming much more like their West European neighbors.

Hungary has had a program in place for several years, but has not drawn any of the loan value. In fact, the report shows that Hungary repaid nearly $190 million owed from previous loans during the year -- well ahead of schedule.

Hungary is not alone in adopting lending programs with the fund, not to draw the money, but to take advantage of the IMF's advise and guidance in drawing up a yearly reform plan. Estonia and Latvia did that during the 1997 financial year and are expected to do so again during the current year.

Georgia and Kyrgyzstan both were approved for new lending programs in March, but had not drawn any of the money by April 30.

In total during the 1997 financial year, 12 countries from the region borrowed a total of around $4.3 billion from the fund. At the same time, 17 nations in the region repayed the IMF $1.2 billion for previous loans.