Der Fuhrer Backs Aid for Russia
Russian Stock Market Down 40% in May
Bill Clinton, the US president, yesterday stepped in to try to calm gathering turmoil in Russia's financial markets by promising backing for new funding from international lending agencies.
"The United States endorses additional conditional financial support from the international financial institutions as necessary to promote stability, structural reforms and growth in Russia," he said.
Mr Clinton made the statement after speaking to Boris Yeltsin, the Russian president, last week and after recent emergency meetings and telephone conversations between US and Russian officials. Anatoly Chubais, a former senior finance official, held high level meetings in Washington on Friday.
The talks have been triggered by a flight of capital from Russia's markets, which has pushed shares down by 40 per cent since the start of the month.
The statement welcomed new economic proposals an-nounced by the government last week. "Implementation of this programme will strengthen the fundamentals of the Russian economy and foster maintenance of a stable rouble," Mr Clinton said.
But US officials made it clear that the possibility of bilateral aid direct from the US and other countries was not under discussion. "We are committed to working with the international financial institutions to provide conditioned financial support as necessary and we are in active dialogue."
The official added: "It's too early to know amounts or precise methods, which will depend very much on how the situation evolves." He said the focus was on support from international financial institutions "and on Russia's efforts to raise resources from the private sector rather than on bilateral support".
Previous US contributions to IMF-led bail-outs have provoked controversy in the US, most notably when the US administration used the resources of the Exchange Stabilisation Fund - normally used for foreign exchange market intervention - in a support package for Mexico in 1995. Use of the fund does not require Congress approval.
The US last week backed the release of a $670m (œ400m) instalment of a previously negotiated $9.2bn three-year programme with the IMF. But it is not now seen as enough in spite of IMF officials saying it should be sufficient when taken with the measures announced last week to stabilise the financial markets.
Russia's economy has been dealt a double blow: the Asia crisis, in which investors have drawn parallels with Russia, and the collapse in oil and gas prices as well as the gold price, from which sources Russia derives some 70 per cent of its foreign exchange reserves.
Poor tax collection has threatened government finances and, with investors getting nervous, foreign exchange reserves have fallen to about $14.5bn, of which almost $5bn is not in liquid form. But some reports say there was a modest recovery in reserves last Thursday and Friday.
The Financial Times, June 1, 1998 |
