Publication: Monitor Volume: 4 Issue: 148

Stanley Fischer, first deputy managing director of the IMF, expressed satisfaction after a two-day visit to Moscow over the weekend to discuss Russia’s implementation of the IMF-agreed austerity program. The IMF wanted to check progress prior to the disbursement of the second $4.3 billion tranche, due in mid-September, of the Fund’s US$22.6 billion rescue plan. Fischer, who met with Prime Minister Sergei Kirienko, presidential envoy Anatoly Chubais, and other senior Russian officials, said he was pleased with the government’s efforts to cut spending and increase tax collection. “Good progress has been made and, if it continues that way, the outcome will be good,” Fischer declared. However, he reminded Kirienko, “There is still a lot of work to be done…in the next weeks and months.” (Reuters, August 2)

Finance Minister Mikhail Zadornov told a press conference last week that tax collection is improving. “In June, the collections were better than in May, and in July they were better again,” Zadornov said. “I expect this trend to continue in August.” (AP, July 30) Doubts remain, however, about the government’s ability to stay the course. Last week, the international rating agency Fitch IBCA downgraded Russia’s long-term foreign currency debt rating from BB to BB minus. The agency said there was doubt whether the Russian government would be able to improve its budgetary position to the extent demanded by the IMF. “The 1999 budget is likely to be the subject of a bitter and destabilizing confrontation between the government and the State Duma,” the agency warned. However, it left Russia’s short-term foreign currency debt rating unchanged at B. (Itar-Tass, July 30)