Publication: Monitor Volume: 4 Issue: 182

Russian Finance Minister Mikhail Zadornov went to Washington and presented a budget plan to his counterparts from the Group of Seven industrialized countries. The plan, which covers the final quarter of 1998, and which the Russian government plans to present to the State Duma, includes a request for US$2.5 billion from the G-7 to help Russia make ends meet. Zadornov noted that before year’s end, Russia must pay US$3.5 billion on its external debt. He said that the government would try to raise an additional US$1 billion through such measures as improved tax collection. (Tax revenues, always extremely low in Russia, dropped precipitously following last summer’s ruble collapse.) The Russian finance minister also met with Michel Camdessus, director of the International Monetary Fund. During that meeting, Zadornov reportedly insisted that the Fund release the US$4.3 billion tranche of the multibillion-dollar bailout on which the two sides agreed back in July. The IMF has withheld this second installment, on the grounds that Moscow has not adhered to the loan’s conditions. Zadornov said that the US$4.3 billion is necessary if Russia is to avoid social protest (Russian agencies, Bloomberg news agency, October 4).

Meanwhile the G-7 finance ministers issued a statement warning Russia against a monetary emission that would lead to inflation. The ministers also said that Russia should negotiate with creditors on restructuring its domestic debt. Russia suspended payment on its short-term treasury bills, known as GKOs, back in August, while simultaneously devaluing the ruble. The G-7 ministers also called on the Russian government to take measures to close insolvent banks.