THE LOGIC BEHIND THE IMF’S LOAN RENEWAL.

On April 3 IMF managing director Michel Camdessus addressed the State Duma and met with President Boris Yeltsin to inform them of the IMF’s decision to restart its monthly loan payments. (Itar-Tass, Reuter, April 3) Camdessus said that the IMF has pledged $21 billion in loans for Russia since 1991, and that the country could become an "economic superpower" if it presses ahead with structural reforms.

The IMF’s decision to resume lending to Russia is based on political rather than economic criteria. It comes just two weeks after the Helsinki summit at which President Bill Clinton pledged to bring Russia into the international economic community in return for its acquiescence to NATO expansion; and less than one month after a government reshuffle which saw the appointment of reformers Anatoly Chubais and Boris Nemtsov as deputy prime ministers. Had the IMF refused to renew its lending, it would have been accused of sabotaging what could be Russia’s last chance at pushing through radical structural reform.

The most positive economic news is that inflation continues to fall, from 2.3 percent in January to 1.5 percent in February and 1.4 percent in March, an annual rate of 18 percent. However, federal tax receipts seem to be running at only 50-60 percent of the planned level, according to Mikhail Zadornov, chairman of the State Duma’s Budget Committee, and some observers are warning that the budget could "collapse" and need to be completely rewritten in the next few weeks. (Segodnya, April 2) Tax collection slumped to 10 trillion rubles in January, but reportedly rebounded to 17.6 trillion rubles in the first 25 days of March, so the Cassandras may be premature. (Finansovye izvestiya, April 3)

But there is little doubt that the pace of structural reform has been much slower than the IMF hoped, and that they are lending on the basis of government intentions rather than in recognition of policies that have been actually introduced. In a speech to students in Moscow on April 2, Camdessus said that "it remains surprising that not a single bankruptcy has yet occurred among major tax offenders, as would have been the case in a properly working market economy." (Reuter) He added that "Russia risks being mired in this economic no man’s land between a centrally planned system and a fully functioning market economy."

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