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Russia: IMF Pressures Government On Legislation And Policy

Moscow, 27 April 1998 (RFE/RL) -- The International Monetary Fund (IMF) is pressing Russia's government not to implement recently enacted legislation on trade retaliation and anti-dumping measures. The IMF is also demanding significant job reductions in the health, education and military sectors, to which President Boris Yeltsin says he won't agree; and demanding an increase in rail freight tariffs, which Russia's rail reformers say should be going down, not up.

The IMF demands, which Prime Minister Sergei Kiriyenko accepted even before he was approved by the State Duma, have been largely concealed until now.

Graham Newman, the head of the IMF's press office, tells RFE/RL a secret Memorandum of Understanding was signed early this month in Moscow. This spells out the policy conditions the IMF insists the Russian government follows, in order to continue receiving IMF loan funds. Although Newman says he has not seen the Memorandum, he said in an interview that it is linked to another document, known as the Letter of Intent, which was signed at the same time by Kiriyenko and by Central Bank Chairman, Sergei Dubinin.

"If the government doesn't carry out the terms and conditions, then there is no disbursement (of IMF funds)." Newman noted.

The Letter of Intent is to be published, but, according to Newman, publication of the Memorandum of Understanding is not intended. "It is a confidential document," he declared, refusing to answer questions about the provisions it contains.

Russian officials denied the commitments in the Memorandum of Understanding, during the Kiriyenko nomination debate. Denials issued by Dubinin of the Central Bank, and also by IMF officials, have been carefully worded to refer to the Letter of Intent - rather than to the Memorandum.

The new Russian trade statute, which Yeltsin signed this month after parliamentary approval, provides the legal basis for Russian domestic producers to launch anti-dumping complaints against foreign imports sold below cost, or at prices that unfairly damage Russia's domestic industries.

Until the law was passed, the Russian Ministry of Foreign Economic Relations said it was powerless to act on complaints of import dumping. These have included complaints against European and American meat, dairy and other food products; and South Korean-made television sets. Lack of this legislation, First Deputy Trade Minister Georgy Gabounia has said, deprived Moscow of a trade defense that is available to all members of the World Trade Organization.

Gabounia has noted that Russian exports, especially of steel products, have been penalized by anti-dumping action in the U.S., Canada, Mexico, the European Union, and several Asian countries.

The IMF representative in Moscow, Martin Gilman, has said the new Russian trade legislation is "very harsh and restrictive. We need to know," he said, "how the government plans to apply the law in practice."

Russian sources have told RFE/RL that other provisions in the IMF documents relate to the sacking of more than 200,000 health and education workers; and the discharge of almost as many military officers.