IMF READY TO DO MORE BUSINESS WITH RUSSIA…

Martin Gilman, the International Monetary Fund’s resident representative in Moscow, told the Russian press last week that “the only thing that matters to the Fund is the realization of the agreement [between the IMF and the government], and whether the government’s program is being implemented. Whether Russia has a full government is entirely a domestic affair.” Gilman declared in an interview given to “Russky telegraf” on April 23 that the government crisis that concluded last week with Sergei Kirienko’s confirmation as prime minister “can not postpone” the release of the next $700 million tranche of the IMF’s Extended Fund Facility.

The IMF’s willingness to approve the release of this tranche is not unconditional, however. It did not appear until two weeks ago, when Kirienko and Russian Central Bank Chairman Sergei Dubinin signed off on the government/RCB official economic program for 1998. Until then, Fund officials had criticized the government on a number of issues, including the granting of special tax incentives for multinational companies that invest in Russia’s automobile industry, and what the IMF views as excessively protectionist import legislation. Gilman also suggested that the Fund’s next mission (due to arrive in mid-May) could find the Russian economy’s performance during the first quarter of 1997 to be out of compliance with previously agreed-upon parameters. The ability of the Russian Pension Fund, as well as some of the regional governments that have floated Eurobonds, to meet their future obligations could well be sources of concern to the IMF, Gilman suggested.

These reservations aside, the IMF seems only too happy at the moment to support Kirienko’s government. Such optimism would seem difficult to reconcile with developments in Russia’s economy–GDP was virtually flat during the first quarter–or in the polity, which having just survived a self-inflicted crisis must now put together a new government. (See following story.)

… BUT NOT UKRAINE.