Publication: Monitor Volume: 3 Issue: 82

International Monetary Fund managing director Michel Camdessus says Russia will probably receive the next tranche of the IMF’s $10.2 billion three-year loan at the end of next month. (Itar-Tass, April 24) Meanwhile, Russian first deputy premier Anatoly Chubais told members of the Russian Duma’s Budget Committee yesterday that the IMF’s loans are now less important for Russia than they were two years ago. Chubais acknowledged that IMF loans are the cheapest way for the Russian government to raise money, but, he said, " we can now raise loans on private European markets at slightly higher interest, since we are recognized as a dependable country."

Chubais may be overstating the IMF’s loss of leverage. The Russian government has indeed diversified its sources of international finance as it has gained access to international financial markets by issuing Eurobonds. But Eurobond issues require a credit rating, and the agencies that issued Russia’s warned at the time of the importance that they assign to Moscow’s relations with the IMF. Were those relations to deteriorate, the agencies would likely be alarmed and revise Russia’s rating down. That would raise the costs of Moscow’s international borrowing and could possibly choke off Russian Eurobond issues altogether. Russia is unlikely, in other words, to be able to thumb its nose at the IMF and still raise money in international markets.

Aluminum Wars Continue.