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IMF praises Russia actions, hopes loan will go ahead
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Updated 1:31 PM ET July 26, 1999
By Janet Guttsman
WASHINGTON (Reuters) - Early economic actions of Russia's new government have
been positive and the board of the International Monetary Fund, aware of the
risks, is likely to go ahead with a new loan, a senior IMF official said
Monday.
IMF Deputy Managing Director Alassane Ouattara told Reuters in an interview
that the IMF needed to be firm with Russia -- already its biggest borrower --
when it considered a new $4.5 billion loan Wednesday.
"We have to be very firm and ask for prior actions to consolidate the fiscal
situation," he said. "We, along with the World Bank, have to make sure that
all the structural issues are on the table and addressed forcefully."
But Ouattara said the IMF board was aware of the issues. The government of
new Prime Minister Sergei Stepashin was, so far, doing what had been asked of
it.
"The first intentions and the first measures taken by the new government are
quite positive. One has to monitor this closely," Ouattara said. "The board
knows the parameters, the difficulties and the risks, so I do hope it should
be okay."
Stepashin is visiting Washington this week for talks with Vice President Al
Gore and other administration officials. But he is due to leave the United
States before Wednesday's IMF board meeting.
Ouattara also defended the IMF's last loan to Russia, a $4.8 billion payment
which Russia spent in a matter of weeks in an abortive attempt to defend the
rouble currency.
"Our judgement at management level was that it was better to go ahead than
not to go ahead," he said. "If we had not gone ahead I think clearly the
situation would have been worse than what we experienced."
The Russian government has already implemented a string of laws and other
measures to win the IMF loan and its latest letter of intent to the IMF
contains a blunt admission that it made mistakes in the past.
"We readily acknowledge that these fundamental elements of the crisis
reflect, in part, the fact that the implementation of the government's
economic program, over the past several years, has been incomplete," said the
letter, published on the IMF's Web site last week.
"Weak implementation has served to worsen structural problems... Moreover
potential benefits from reforms, most significantly privatization, have been
diminished owing to the absence of transparency in the process."
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