-Caveat Lector-

By ANNA DOLGOV

MOSCOW (July 19, 1999 3:32 p.m. EDT http://www.nandotimes.com) - Russia could
receive as much as $3.8 billion in foreign loans this year, allowing the
government to stop using borrowed money to meet foreign debt payments, a top
financial official said Monday.

The International Monetary Fund is expected to decide soon on releasing the
first installment of an 18-month, $4.45 billion loan program to Russia.

If the approval goes through, Russia could receive up to $1.9 billion from
the IMF this year, said Mikhail Zadornov, the country's top envoy to
international financial institutions.

The IMF loan, in turn, will trigger more lending - $1.85 billion - from the
World Bank and Japan, Zadornov told journalists.

A large share of the World Bank money will go to finance reform of Russia's
moribund coal industry and to prop up social programs. But the rest would
still be enough to enable the government to stop borrowing from the Central
Bank - and depleting Russia's scarce hard-currency reserves - to meet its
foreign debt payments this year.

"We will cease using Central Bank reserves to finance our external debt
(repayments)" Zadornov said.

The IMF is to consider new lending to Russia during a board meeting set for
July 28, and the World Bank is to complete its loan review process on July 29
or Aug. 3.

If the IMF loan is approved, Moscow will begin talks the next day on
restructuring other debts to the London and Paris Clubs of commercial
creditors, Zadornov said.

The IMF froze a loan package worth $22.5 billion after Russia's financial
collapse last August. The new loan under consideration was made contingent on
Russian parliamentary approval of a package of laws intended to increase
government revenue, combat corruption and restructure the commercial banking
system.

Russia has defaulted on its Soviet-era debt but remains committed to meeting
payment schedules on most debt incurred since the Soviet collapse in 1991.

Zadornov said that this year, Russia would pay $4.2 billion it owes the IMF,
the Interfax news agency reported. In the second half of this year, Russia is
due to pay around $3.5 billion to service its Eurobonds and debts to the IMF.




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