Meeting in Washington yesterday, the executive board of the IMF approved a financial aid package to Russia worth US$11.2 billion, of which only US$4.8 billion was tagged for immediate release, not the US$5.6 billion originally expected. The board cut the sum by US$800 million after the State Duma’s refusal last week to approve two of the measures IMF negotiators had set as essential conditions: first, hikes in personal income tax rates and, second, strengthening of the pension fund. The board indicated, however, that the loan could be topped up later if the Duma passes the delayed legislation. Prime Minister Sergei Kirienko has urged parliament to reconvene for an extraordinary session in August to authorize the government’s efforts to raise more revenue and keep the anticrisis program on track. (AP, July 20)
The IMF said it expects the bulk of the money to be paid by the end of the year. Its decision to withhold part of the initial payment is seen as a warning that the Fund does not intend to allow Russia to backslide on the tough conditions it has set. (BBC, July 21) The IMF’s decision is now expected to clear the way for loans from the World Bank and other lenders, who have pledged up to US$17 billion in additional funds for Russia.
ENTHUSIASM FOR T-BILL EXCHANGE.