Publication: Monitor Volume: 4 Issue: 136

On June 15, the State Duma grilled Finance Minister Mikhail Zadornov over the conditions which the IMF set as part of the US$22 billion rescue package put together over the weekend. Zadornov explained that the interest rate on IMF and World Bank funds will be less than five percent, and on Japan’s US$400 million only two percent. Duma leaders were suspicious that the international community must have exacted some secret concessions from Russia in return for such a sweet deal. Speculation ranged over everything from the breakup of Gazprom to the return of the Kuril islands. (Russian agencies, Kommersant-daily, July 16)

Zadornov reassured the deputies that there were no secret deals, that the international community had a common interest with Russia in avoiding the collapse of Russia’s financial markets. However he said that no text of the agreements with the IMF and World Bank was yet available. In fact, IMF agreements are not, as a rule, published. Duma members also complained that as an international treaty, the IMF deal should be ratified by the parliament. As an international loan, they said, it should also be subject to Duma approval, since the budget law fixed a ceiling of international borrowing of US$7.5 billion for 1998. Zadornov fended off this challenge by saying that US$11.2 billion of the money will go straight into the Central Bank reserves, not the budget. The remaining US$3.3 billion in loans coming this year will therefore be within the legal limit.