Publication: Monitor Volume: 5 Issue: 43

Russian officials have reacted with anger to the statements this week made by Michel Camdessus, the International Monetary Fund’s (IMF) general director, and Stanley Fischer, the Fund’s deputy director, that Russia will not receive further credits without presenting a credible economic plan. On March 1, following a speech in Washington to the Institute of International Bankers, Camdessus called Russia’s 1999 budget unrealistic and said that the fund would not make loans to Russia “on complacent terms.” IMF officials criticized Prime Minister Yevgeny Primakov’s government for unsatisfactory tax collection and failure to reach a restructuring agreement with foreign holders of Russian treasury bills, which were frozen last August (Reuters, March 1; Russian agencies, March 2).

First Deputy Prime Minister Yuri Maslyukov, who has led the negotiations with the IMF, angrily charged yesterday that Camdessus is applying “indecent” pressure on Russia to agree to certain conditions which “are unacceptable to us” (Russian agencies, March 2). Maslyukov said in a separate interview that the IMF’s main demand–that Russia’s budget include a primary surplus of 3.5 percent of gross domestic budget–would force the government to cut another 45-50 billion rubles (US$2 billion). Maslyukov said he is “categorically against” such a cut, arguing that it would harm most “the least well off,” including pensioners and state workers (RTR, March 2). The Primakov budget projects a primary surplus of just over 2 percent of GDP.

Russia is supposed to pay more than US$17.5 billion this year to foreign creditors, including US$4.7 billion to the IMF. Russia is seeking an agreement from the IMF to restructure its debt, which would be a green light to other creditors to make similar concessions. Until yesterday, top Russian officials, especially Maslyukov, had said that talks with the IMF were going well.

For his part, Finance Minister Zadornov warned yesterday that unless Russia reaches an agreement with the IMF soon, it could run out of the hard currency Reserves needed to make the necessary foreign debt payments. This, according to Zadornov, would force the government to print more money (Financial Times, March 3). Russia’s hard currency reserves have fallen to US$7 billion, US$1.5 billion of which are being held in illiquid securities (Segodnya, March 3).