Publication: Monitor Volume: 5 Issue: 21

Russian Prime Minister Yevgeny Primakov met yesterday with Stanley Fischer, the International Monetary Fund (IMF)’s first deputy managing director, during the annual international economic forum in Davos, Switzerland. In an interview with NTV television last night in Davos, Primakov said he was satisfied with the talks. Fischer, he said, “knows well both the situation in our country and the policy of our government.” Primakov said that it is more important that Russia reach “an understanding” with the IMF to receive new funds, because the absence of an IMF seal of approval “blocks all other possibilities for us.” He noted that both renewed relations with the International Bank for Reconstruction and Development, and a US$800 million loan from the Japanese government, are awaiting an IMF green light. Primakov did say, however, that Russia was hoping for an IMF loan to help it pay off previous IMF loans. An IMF team is now in Moscow assessing the state of the Russian economy and will soon release its conclusions. Primakov said he planned to sign a “memorandum” today and send IMF Managing Director Michel Camdessus answers to questions the Fund has directed to the Russian government (NTV, January 31; Russian agencies, January 31).

IMF officials have repeatedly said that further IMF credits to Russia would depend on whether the government came up with a “rational” budget. The IMF has criticized Moscow’s draft 1999 budget for being unbalanced and based on unrealistic macroeconomic parameters. According to Russia press reports, Fischer–asked yesterday whether he had discussed the issue of further credits–refused to answer, saying only: “We will continue the discussion” (Russian agencies, January 31).

Primakov addressed the Davos forum on January 30. The Russian prime minister said Russia wanted to attract foreign money, but only in the form of “direct investments in the real sector of the economy” and not “quick, speculative, short-term” portfolio investments. He promised to restore the faith of foreign investors in the Russian economy by guaranteeing their rights, including the right to repatriate their profits (Russian agencies, January 30). In this regard, Primakov, during his interview with NTV yesterday, called for “very active measures” against economic crime, adding that potential foreign investors would welcome them. “Foreign investors are the first to ask us to clear the scene of corruption and crime because they are unable to work normally under such conditions,” Primakov said. “They are the most staunch supporters of more determined measures against corruption and economic crimes” (NTV, January 31).

During his January 30th address to the Davos forum, Primakov admitted that the government will not be able to avoid inflation, but said it hoped to lower inflation by the end of the year. The same day, Finance Minister Mikhail Zadornov said that the government had already succeeded in lowering the inflation rate. Zadornov said that while prices are still rising, inflation will, during the first twenty-five days of January, be 1.5 times less than it was in December, when the monthly rate exceeded 11 percent (Russian agencies, January 30).