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Russia: Finance Minister Says IMF Funds Will Service Debt

Moscow, 12 August 1998 (RFE/RL) - Finance Minister Mikhail Zadornov said today the Russian government will use part of recently-received IMF funds to help service its mounting debt. Zadornov told a Moscow news conference that $1 billion from IMF funds already transferred to Russia's central bank will be used this month to redeem government debt.

Zadornov said the move had been agreed on when IMF first deputy managing director Stanley Fischer visited Moscow earlier this month

The first $4.8 billion installment of a $22 billion IMF aid package had previously been earmarked specifically to defend the ruble. Russian government debt in the form of domestic bonds and treasury bills has risen sharply in recent months, triggering fears of a debt default or ruble devaluation.

Zadornov said the government believed it could stave off a devaluation of the ruble. Aleksandr Livshits, deputy head of the Kremlin administration, today also ruled out a devaluation of the ruble. But Livshits said the Finance Ministry had enough money to service all debts and that Russia need not draw upon IMF credits.

Russian stocks meanwhile were 4.7 percent higher today in early trading. Analysts said the rise on the Russian Trading System Index appeared to be a correction of yesterday's fall of nine percent, which mirrored stock market tumbles across Asia and in the United States.