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IMF Approves $4.5 Billion in Aid to Russia

July 29, 1999|From a Times Staff Writer

WASHINGTON — International Monetary Fund officials approved $4.5 billion in emergency financing to Russia, the first IMF credit to the financially beleaguered nation since Moscow defaulted on its debts last year and sent financial tremors around the globe.

The deal unlocks another $3 billion that Russia desperately needs from the World Bank and Japan. A total of $640 million would be made available immediately, said an IMF spokeswoman.

The IMF decision represents a guarded approval of recent Russian policies and comes as the giant nation prepares for parliamentary elections in December and presidential balloting next June.

The decision by the IMF's 24-member board came after meetings between Mikhail Zadornov, Russian President Boris Yeltsin's financial envoy, and Stanley Fischer, the IMF's deputy managing director. It comes almost a year after Russia defaulted on debts last Aug. 17 and imposed a ruble devaluation that startled investors throughout the world. The IMF then froze a loan package worth $22.6 billion.

In April, the two sides reached a preliminary accord to resume financing. Since then, there has been a flurry of discussions between the two sides and an independent audit of Russia's finances.

Those developments slightly improved the international financial community's battered confidence in Russia, and Wednesday's IMF loan approval was widely expected. The new loan was made contingent on Russian parliamentary approval of a package of laws intended to increase government tax collections, combat corruption and restructure the commercial banking system, all of which remain enormous drags on the economy.

Russian Prime Minister Sergei Stepashin, seeking to bolster confidence in his nation's financial policies, vowed in Washington on Tuesday that Russia would "fully implement our obligations."

An IMF accord could encourage other rich creditors to restructure Russia's debts. Wealthy nations are scheduled to meet today in Paris to consider rescheduling up to $10 billion of Russia's debt.

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