Russia rejects IMF loan

Putin has been a tough negotiator for Russia

Russia has rejected an offer of a new loan from the International Monetary Fund, insisting it has enough financial resources and wanted to stop being "under constant IMF control".

Russian Deputy Prime Minister Alexei Kudrin made the announcement on Wednesday that Moscow had decided against signing a one-year stand-by programme with the IMF.

"After assessing our capabilities, we have decided against striking a full-scale cooperation agreement with the IMF for the year," Mr Kudrin was quoted by Russian news agencies.

The high price of oil recently is thought to have filled the Russian Treasury with the highest level of official reserves ever.

The rejection of the IMF comes on the same day as President Vladimir Putin reshuffled his cabinet and as tension grows between the US and Russian governments over spying and the Star Wars Two project.

IMF loans

Under the IMF offer no money would have been provided unless the country's economy took a turn for the worse.

The accord would have still required the Russia to implement policies it has rejected for years, such as charging market rates on central bank loans to the government and tightening banking supervision.

Both Mr Kudrin and IMF-sources were quoted as saying they would continue consultations over striking a longer-term, three-year cooperation agreement.

Russia has only defaulted on this debt twice, once when the Soviet Union collapsed in 1991 and then again in 1998, when the rouble collapsed amid crisis in global financial markets.

Since President Putin came to power in 1999, Russia and the IMF have struggled to agree a programme of reform and there have been no IMF-approved economic programmes.

Last year Russia repaid $3.4bn to the IMF and is due to pay $2.06bn in 2001 including a payment on Wednesday to meet its obligations for March.

The Paris Club

Mr Kudrin, who also serves as finance minister, stressed that Russia would repay in full its debt to the Paris Club of creditor nations that comes due this year.

The Paris Club, which works in cooperation with the IMF, represents the US and European countries offering loans.

The Russian authorities have made major progress as far as honouring their obligations is concerned. We will take a final look at this aspect at next week's Paris Club meeting.

Jean-Pierre Jouyet
President
Paris Club

At the start of the year Moscow's debt to the Paris Club stood at $48.3bn, of which $38.7bn were Soviet-era obligations. An estimated $20bn of this is owed to Germany.

On 2 March, Russia paid $32.2m to its Paris Club creditors, completing the total $1.3bn debt repayments due for February.

"The Russian authorities have made major progress as far as honouring their obligations is concerned. We will take a final look at this aspect at next week's Paris Club meeting," said Paris Club President, Jean-Pierre Jouyet on Wednesday.

Last year saw the economy grow an estimated 7% and analysts expect it to grow another 4% in 2001. Inflation was 20.6% in 2000, down from 85.8%, and is forecast to hit 18% this year.

Russia is also expected to balance its budget this year.