Russia has reached an outline agreement with the IMF and the World Bank on a new aid package of approximately US$15 billion. This is intended as a “dormant” loan–one which will not be spent but will instead sustain the ruble’s exchange rate vis-a-vis the dollar. Russia’s chief negotiator Anatoly Chubais said yesterday that final agreement could be reached by the end of the week, though IMF official said the loan would be forthcoming only if Russia committed itself to further structural reforms. Chubais said the loan was “very important” for Russia, but that “we need to make our own efforts, without which the crisis cannot be overcome.” (RTR, Itar-Tass, July 7)
Russian markets rallied at the news after a day that saw equity and bond prices continue their downward plunge, the ruble fall outside its indicative trading band, and yields on Russian Treasury-bills soar to 120 percent, way above the refinancing rate, currently set at 80 percent. (RTR, July 7)
TEN THOUSAND ATTEND ROKHLIN FUNERAL.