IMF SMILES ON ARMENIA, UKRAINE; FROWNS ON BELARUS, UZBEKISTAN.

Armenian finance minister Levon Barkhoudarian told a news conference in Yerevan on May 12 that official IMF approval for the release of the first $25 million tranche of the extended structural adjustment facility (ESAF) for this year will be forthcoming in June. (Noyan Tapan, May 13) This announcement, which followed two weeks of negotiations with a visiting IMF mission, marks a turnaround from the last meeting between Armenia and Fund representatives in February. It concluded without any promises of IMF funding for the year. According to the head of the IMF’s delegation, Armenia has succeeded since February in increasing its tax collection and reducing central bank crediting of the budget deficit, in line with the Fund’s recommendations. A second $25 million tranche of Armenia’s $150 million ESAF is slated for release in the fall.

Ukraine’s prospects for receiving its long-delayed $2.7-2.9 billion extended funding facility (EFF) credit from the IMF seemed to improve last week. During his visit to Washington, President Leonid Kuchma was told by IMF managing director Michel Camdessus that the Fund would probably decide to release the EFF "in the course of the coming weeks". (Interfax-Ukraine, May 16) While Camdessus reminded Kuchma that the release depended on parliamentary approval of Ukraine’s 1997 budget and tax reform legislation, Camdessus also described as a "great accomplishment" the Ukrainian government’s May 12 decision to make the hryvnya convertible in accordance with criteria set forth in Article VIII of the IMF’s articles of agreement. Camdessus’s enthusiasm would seem to contradict recent reports that the IMF is losing patience with Ukraine’s inability to pass its basic fiscal legislation.

By contrast, recent IMF missions to Belarus and Uzbekistan ended with calls for major changes in economic policies and no promises of imminent financial assistance. Richard Haas, the Fund’s resident representative in Minsk, told Interfax that Belarus’s current economic policy "finds no support at the International Monetary Fund." (Interfax-FIA, May 13) Haas described Belarus’s monetary policy in 1997 as "quite firm" (such an assessment is difficult to square with the fact that inflation in Belarus is rising faster than virtually all of its trading partners), but also said that privatization and enterprise restructuring in Belarus are "virtually non-existent". While the Fund stands ready to renew negotiations over the dispensation of the $280 million credit for Belarus issued in September, 1995 (of which only $70 million has been released), the Belarusan government has yet to respond to the IMF’s invitation, he added.

Meanwhile, a visit to Tashkent earlier this month by IMF deputy managing director Stanley Fischer apparently ended with the government of Uzbekistan strongman Islam Karimov caving in to the IMF’s demands. According to a joint IMF-government press release, Uzbekistan has acknowledged that it must meet all of the obligations associated with the agreement accompanying a $185 million stand-by credit approved by the IMF in December 1995. Funds from this credit were suspended in November 1996 when the IMF ruled that above-target inflation rates and the introduction of foreign-exchange controls had pushed Uzbekistan out of compliance with the agreement. In order to receive the $92 million in funds remaining in the agreement, the government agreed to attempt to get the economy back into compliance by the end of 1997.

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