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Strategies & Market Trends : Investment in Russia and Eastern Europe -- Ignore unavailable to you. Want to Upgrade?

To: djane who wrote (366)	7/20/1998 9:26:00 PM
From: Real Man	Read Replies (1) \| Respond to of 1301

Russia Fears Reduced IMF Loan HARRY DUNPHY Associated Press Writer WASHINGTON (AP) - Anatoly Chubais, Russia's chief negotiator with the International Monetary Fund, said Monday the first installment of a $17 billion package in new IMF loans the country needs to bolster its currency, the ruble, could be reduced. He said the main obstacle he and the IMF's executive board had to resolve was the failure of the State Duma, the Russian parliament, last week to enact laws on key elements of the government's economic plan that would increase taxes and reduce social welfare payments. Chubais said there were ''no unresolved issues'' between Russia and the IMF, although he thought three times over the past three days the loan package would not be approved. However, he said, ''three times we were able to find solutions.'' A board decision on the loan program was expected later. Chubais said he spent more than two hours answering ''very difficult'' questions from board members, who include the U.S. representative, Karin Lissakers. The IMF portion of the rescue package is $11.2 billion and the IMF board was supposed to announce agreement on the first installment of $5.6 billion. Chubais said the $5.6 billion payment could be reduced by up to $1 billion. ''If the amount of the reduction is less than $1 billion, then this will not harm Russia's situation,'' he told reporters. ''The second (installment) will be paid Sept. 1 which is less than 50 days away'' so it will not undermine the program. The important thing for the markets to know was that program was going to be approved. The IMF board decision is expected to clear the way for loans from the World Bank and other lenders who are part of the package. The bank will decide early next month on a $1.5 billion economic restructuring loan for Russia. If the loan is approved, Russia will receive $800 million this year and the rest in 1999. Russia's parliament recessed last week after failing to approve several elements of a government economic plan that the IMF has set as a prerequisite for the loan. The IMF had said it would not approve a new loan unless Russia raised government revenue through a variety of measures, especially improved tax enforcement. Chubais said earlier the IMF had said in negotiating the loan package that Russia ''will only be trusted when the government, the State Duma, the Federation Council and the president have similar positions on the key issues.'' Russia pledged Monday to improve its tax collections, which now collect only a fraction of what the government is owed. In a joint statement sent to the IMF on Monday, Prime Minister Sergei Kiriyenko and Central Bank Chairman Sergei Dubinin said they had acted to increase revenue and cap the budget deficit, the Interfax news agency said. In sign of confidence in Russia's financial prospects, investors exchanged nearly $6 billion in short-term treasury bills for longer-term bonds Monday. The exchange, undertaken on IMF advice, was intended to ease Russia's crushing short-term debt burden. The State Duma, parliament's lower house, recessed Friday for the summer without passing key elements of the government's economic plan that would increase taxes and reduce social welfare payments. Kiriyenko and President Boris Yeltsin have said they will pass the defeated measures by decree. Two such decrees were signed over the weekend. One, a land tax measure, doubles the tax on certain nonagricultural property.