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Wednesday, 8 December, 1999, 08:49 GMT
IMF delay angers Russia
refugee in Chechnya Russia believes Chechnya is reason for delay

The International Monetary Fund (IMF) says the decision to delay the next chunk of its $4.5bn loan to Russia is not connected to events in Chechnya.

Battle for the Caucasus
The loan is being paid in instalments over 18 months. The first was paid in July and the second $640m should have been paid in October.

But that payment was delayed because of alleged evidence that Russia lied about what had happened to the first instalment.

There seems little immediate sign of it being paid after IMF managing director Michel Camdessus released a list of structural reforms Russia had failed to accomplish.

The IMF's status as a non-political organisation is called into question
Viktor Khristenko

Russian officials reacted angrily to the latest suspension, describing the move as politically motivated and one that raised questions about the IMF's independence.

The reforms which the IMF says Russia had agreed - but failed - to implement by 30 September were to:

  • increase rates of cash collection for electricity, heating, natural gas and rail and freight services.

  • amend insolvency laws that favour corporate restructuring over bankruptcy.

  • award contracts for financial management reviews and annual audits of state pensions, social insurance, medical insurance and road funds.

  • eliminate the deposit requirement for prepayment of imports.

    Mr Camdessus said: "When these remaining issues have been satisfactorily resolved, I expect to recommend completion of the review (of the Russian loan instalment) to the IMF board."

    He said Russia had met or exceeded several economic targets the fund set.

    "In particular ... expectations have been exceeded regarding economic growth, the containment of inflation, the fiscal balance and international reserves," he said.

    Nato talks at White House

    Mr Camdessus has said in the past that the campaign in Chechnya could lead to suspension the IMF money.

    The IMF claims to be an independent body and to make its loans based on economic criteria, but several governments have called for suspension of the IMF loans to protest against Russia's actions in Chechnya.

    US president Bill Clinton appeared not to be among them. His spokesman Joe Lockhart suggested that cutting off economic aid to Russia could thwart efforts to promote democracy and reduce the nuclear threat.

    Visiting NATO Secretary General George Robertson said he "spent a fair amount of time talking" to President Bill Clinton about suspending IMF aid to Russia.

    But he said they agreed on the need to keep Russia involved in world affairs.

    Russian Prime Minister Vladimir Putin denied that Russia had failed to fulfil its commitments.

    "The formal pretext is our supposed failure to execute certain commitments," Interfax quoted him as saying. "We do not agree."

    And his deputy Viktor Khristenko told NTV television: "It is clear that political considerations dominated when this decision was taken. The IMF's status as a non-political organisation is called into question."

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    See also:
    24 Sep 99 |  The Economy
    Russia: The IMF's biggest failure
    12 Nov 99 |  The Economy
    Russia and IMF locked in loan talks
    31 Aug 99 |  The Economy
    Russia 'lied to IMF'
    26 Sep 99 |  The Economy
    Russia urged to fight corruption
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