Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education

Front Page



UK Politics







Talking Point
On Air
Low Graphics

Wednesday, June 24, 1998 Published at 10:52 GMT 11:52 UK

Business: The Economy

Russia bags IMF loan

The taxman cometh: Russian tax police rehearse a raid

President Yeltsin's dramatic speech on Tuesday, promising to push through tough economic reforms and restructure the tax system, has paid off: the International Monetary Fund (IMF) has agreed to release a $670m loan.

[ image: Anatoly Chubais persuades the IMF]
Anatoly Chubais persuades the IMF
After meeting with an IMF delegation in Moscow, Russia's chief negotiator Anatoly Chubais said: "We have managed to remove the main problems" that had hampered the extension of the loan to Russia.

The IMF's Deputy Managing Director, Stanley Fischer, confirmed that the IMF leadership would recommend to its board of directors to provide the loan to Russia, and that the decision could come as early as Thursday.

The money is an instalment of a much larger $9.2bn loan. The IMF had frozen the funds, complaining that the Russian government was dragging its feet on tax reform and public spending controls.

After the meeting, Mr Chubais said Moscow and the Fund could now move on to discuss an additional financial package to support the rouble and restore confidence to Russia's financial markets. Russia has said it may need up to $15bn to rescue its economy.

Mr Fischer said, however, that talks on an additional billion-dollar loan could be difficult. "We agreed on a general approach that needed to be taken. We agreed that this could be a difficult negotiation because the measures are not easy."

He confirmed negotiations would "begin very soon", but that they could take "quite a while."

A spokesman for the Russian government acknowledged that negotations could last one to two months.

Mr Chubais, a former Deputy Prime Minister, had been appointed last week to liaise with the International Monetary Fund (IMF) and other western lending bodies.

Yeltsin talks tough

[ image: Prime Minister Sergei Kiriyenko has bad news]
Prime Minister Sergei Kiriyenko has bad news
On Tuesday, the Russian government unveiled a new set of plans to slash public spending and shake up the country's troubled tax system. The harsh financial regime is designed to prevent a devaluation of Russia's currency, the rouble, calm the financial markets and attract foreign investment.

Sergei Kiriyenko, the Russian Prime Minister, said his government would cut spending by 42bn roubles ($6.8bn) whilst increasing tax revenues by 20bn roubles ($3.2bn).

The reforms were announced after President Boris Yeltsin described Russia's economic situation as "alarming" and set parliament a deadline to back his government's radical economic reforms. He threatened to push through the programme "by other means" should parliament not comply.

Mr Kiriyenko said failure to adopt the economic reforms could threaten Russia's security and trigger a political crisis.

Advanced options | Search tips

Back to top | BBC News Home | BBC Homepage | ©

The Economy Contents

Relevant Stories

23 Jun 98 | The Economy
Russia told to tidy up its act

24 Jun 98 | The Economy
Russia outlines emergency reforms

23 Jun 98 | The Economy
Yeltsin's speech on economic reforms

23 Jun 98 | The Economy
Crisis-hit Russia facing IMF scrutiny

Internet Links

International Monetary Fund

The BBC is not responsible for the content of external internet sites.

In this section

Inquiry into energy provider loyalty

Brown considers IMF job

Chinese imports boost US trade gap

No longer Liffe as we know it

The growing threat of internet fraud

House passes US budget

Online share dealing triples

Rate fears as sales soar

Brown's bulging war-chest

Oil reaches nine-year high

UK unemployment falls again

Trade talks deadlocked

US inflation still subdued

Insolvent firms to get breathing space

Bank considered bigger rate rise

UK pay rising 'too fast'

Utilities face tough regulation

CBI's new chief named

US stocks hit highs after rate rise

US Fed raises rates

UK inflation creeps up

Row over the national shopping basket

Military airspace to be cut

TUC warns against following US

World growth accelerates

Union merger put in doubt

Japan's tentative economic recovery

EU fraud costs millions

CBI choice 'could wreck industrial relations'

WTO hails China deal

US business eyes Chinese market

Red tape task force

Websites and widgets

Guru predicts web surge

Malaysia's economy: The Sinatra Principle

Shell secures Iranian oil deal

Irish boom draws the Welsh

China deal to boost economy

US dream scenario continues

Japan's billion dollar spending spree