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To: Bobby Yellin who wrote (12457)	6/1/1998 9:30:00 PM
From: goldsnow	Respond to of 116915

IMF resources reaching limits as Russia reels 07:39 p.m Jun 01, 1998 Eastern By Adam Entous WASHINGTON (Reuters) - The International Monetary Fund is running short of money because of Asian bailouts and experts fear it could be stretched beyond its limits if asked to inject funds into Russia to calm panicking markets. The IMF, seen as the world's lender of last resort, has warned that its usable resources would be just $10 billion to $12 billion without a proposed replenishment, which has stalled in the Republican-controlled U.S. Congress. The lending agency has already promised to release the next $670 million tranche of a $9.2 billion loan to Russia in June. That comes on top of multibillion-dollar rescues for three struggling Asian nations last year. But some market experts say the IMF, Western governments and banks will need to come up with billions of dollars in extra support to help Moscow cope with the fallout from Asia's economic crisis. Russia could need $10 billion or more, they say, an amount leaving the IMF no cushion should the crisis deepen or spread. Morris Goldstein, a senior fellow with the Washington-based Institute for International Economics, said the IMF should have enough money on hand to help Moscow because it can tap into a roughly $23 billion special credit line called the General Arrangements to Borrow (GAB). ''They can deal with Russia on the financial side if they tap the GAB,'' said Goldstein, a former IMF staffer. ''The problem is what's likely to be the next crisis. You really are starting to get close to the bottom of the barrel.'' ''The IMF should have reserves to handle Russia,'' added Greg Mastel, vice president with the Economic Strategy Institute. ''But nobody knows when the next crisis will come up and nobody knows how much it will cost,'' Mastel said. ''We're all exposed.'' President Clinton promised over the weekend to help pull together additional aid for Russia if needed from the IMF and the World Bank. The State Department said Monday that Washington was coordinating efforts with other Group of Seven top industrial nations. But the administration said direct support from Washington was unlikely. Analysts said the administration's plan could leave the IMF with little money left to deal with future crises in other emerging markets. ''There might not be enough left in the IMF cupboard, and that's dangerous financially,'' said Willard Workman, the U.S. Chamber of Commerce's vice president for international affairs. White House spokesman Mike McCurry said the administration was concerned by IMF cash levels, and added that the financial turmoil in Russia should spur congressional leaders to support new funding for the lending agency. ''There is concern that (the funding) needed by the IMF have to be replenished,'' McCurry told a news conference. ''Working to deal with the situation in Russia is difficult, and is a reminder, we hope, to the United States Congress of the importance of replenishing the resources that the IMF has available.'' Clinton has been trying to convince Congress to provide $18 billion to replenish IMF resources drained by multibillion dollar rescue deals for Indonesia, South Korea and Thailand. The IMF package has stalled in the House of Representatives, where it faces stiff opposition. Conservatives argue that the IMF, by coming to the rescue of countries in trouble, has encouraged governments and international bankers to engage in ever-riskier business. It was unclear whether Russia's problems and fears of its spread would spur Congress to approve IMF funding. In a sign the package still faced an uphill battle, U.S. Senate Majority Leader Trent Lott said on Monday that the lending agency had ''sufficient funds'' to help Moscow. The Mississippi Republican also told reporters: ''Congress is not going to approve more taxpayer dollars for IMF without more transparency... There's a lot of concerns that IMF's policies are quite often counterproductive.'' Copyright 1998 Reuters Limited.

To: Bobby Yellin who wrote (12457)	6/1/1998 9:34:00 PM
From: goldsnow	Read Replies (2) \| Respond to of 116915

South Africa next? I doubt EU will risk world crisis by having less than 20% gold...not enough paper to go around... U.S., G7 nations plan aid for Russia 08:44 p.m Jun 01, 1998 Eastern By Adam Entous WASHINGTON, June 1 (Reuters) - The United States said on Monday it was working with other Group of Seven major industrial nations on providing more financial aid to Russia to keep it from sliding further into financial chaos. The announcement underscored Washington's concern about the economic turmoil in Russia, but for a second day failed to provide details on the size, scope and timing of the emergency response the U.S. administration was planning. ''We are now very actively involved in working with Russia, in working with the G7 nations, in working with the IMF and the World Bank with respect to the financial situation, the reforms that Russia would need to continue taking in order to be successful, and then additional financing,'' U.S. Treasury Secretary Robert Rubin told CNN's ''Moneyline'' program. ''All of this will be focused through the international financial institutions, most immediately through the IMF, although the World Bank also has a very important role to play,'' he added. Asked if the United States would provide financial support directly to Russia, the treasury secretary said: ''I don't think that unilateral or bilateral action, either one, is the most effective way to proceed.'' President Bill Clinton announced on Sunday that Washington would help mobilize more aid for Russia if needed from the International Monetary Fund and the World Bank to calm financial markets and make it easier for Moscow to cope with the effects of Asia's economic crisis. The announcement followed high-level talks between senior U.S. and Russian officials and was designed to reassure investors that the United States, through the IMF and World Bank, was ready to step in to calm markets. ''The past few days have been difficult for Russia, as well as other emerging markets,'' U.S. State Department spokesman James Rubin told a news conference earlier on Monday. ''However, Russia's new policy package, an agreement with the IMF staff, was the right framework to reassure investors.'' He said the government was putting ''a sound fiscal strategy in place to promote a stable ruble,'' and commended Russian Prime Minister Sergei Kiriyenko on meeting with representatives of several major Western banks. ''This proactive approach to implementing their economic strategy and explaining it to the investment community is a good sign that the Russian government is seriously committed to restoring confidence and stability to the Russian market,'' the State Department spokesman said. Mark Medish, deputy assistant secretary of the U.S. Treasury, expressed guarded optimism about Russia's economy, saying the country was on the right path with its reforms although it may face a bumpy ride in the short term. ''I am bullish about the Russian Bear,'' said Medish. ''I am prudently bullish.'' But so far Washington's pledge of support has failed to satisfy currency markets, and Russian shares slumped over 10 percent to their lowest close since October 1996 on Monday. The Clinton administration has offered few specifics about its proposal for additional emergency aid. Analysts say the IMF may need to come up with billions of dollars in extra cash to help Moscow in the coming months, on top of the money it has already pledged. The IMF signaled last week that it would quickly disburse the next $670 million tranche of a $9.2 billion existing loan to Russia. The IMF and World Bank have declined to comment on Washington's support for additional aid. Treasury Secretary Rubin said it was important for the United States to help Russia, as it was critical for Washington to support Asia's crisis-hit economies. ''It is vitally important to our interests that this be worked through,'' he said. Citing market turmoil in Asia and Russia, he urged the U.S. Congress to approve new funding for the IMF. The Clinton administration has been trying to convince Congress to provide $18 billion to replenish IMF resources drained by multibillion-dollar rescue deals for Indonesia, South Korea and Thailand. But the IMF package has stalled in the House of Representatives, where it faces stiff opposition. ''The IMF is at historically low (funding) levels,'' Robert Rubin said. ''It is critical that the House act, and act quickly.'' REUTERS Copyright 1998 Reuters Limited.