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Thursday, April 22, 1999 Published at 06:24 GMT 07:24 UK

Business: The Economy

IMF set to bail out Russia

Russia's economic problems are far from over

Michel Camdessus denies putting pressure on Russia
The International Monetary Fund is poised to agree a new lending deal with Russia to help shore up its faltering economy.

Michel Camdessus, the head of the IMF, said the new deal could be agreed in the next few days.

In return for the badly needed loans Russia will have to agree to new economic reforms

[ image: Michel Camdessus: A Russian deal is near]
Michel Camdessus: A Russian deal is near
The IMF halted its lending programme to Russia last August after the government devalued the rouble and defaulted on some foreign debt.

Russia's economic woes sent shockwaves reverberating around the world's financial system. The country still faces many difficulties and needs help to stage a sustained recovery.

Mr Camdessus said that Russia remained the fund's biggest problem.

Improving climate

However, he said that the world economy had shown signs of recovery over the past six months - although he cautioned against complacency.

"The climate is distinctly better," he said.

Brazil, Latin America's largest economy, has faced huge financial problems - but the IMF believes it has now pulled back from the brink.

The crisis that spread across Asia also caused investors to bail out of developing countries.

Now Mr Camdessus said capital flows were starting to recover and the IMF had probably been too pessimistic in its latest forecasts for Brazil - a projection that output would contract by 3.8% this year.

"What we see in the strengthening of the vitality of the economy of Brazil suggests that we could have been wrong," he said.

Bankers and finance ministers are preparing to meet in Washington for the spring meeting of the World Bank and the IMF.

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