The World Bank has released the first half of a $500 million loan to help Russia modernize its coal-mining industry. The second half is expected to be paid in the third quarter of this year. (Interfax, July 26) The loan — said to be one of the longest and toughest deals the World Bank has ever negotiated — is intended to foster the full privatization and modernization of the Russian coal industry. In theory it will free Russian government funds from supporting the one-third of Russian mines believed to be losing money, and redirect those funds to modernizing the remaining two-thirds of Russia’s mines which, it is hoped, can be made profitable. Thus the World Bank has stipulated that the money may not be spent on operating subsidies, but must used to retrain laid-off miners and for welfare benefits for the miners and their families — housing, medical care, kindergartens — that until now has been paid for by the mines. (Izvestiya, June 29)
The Bank has set unusually strict conditions, including the time-frame within which unprofitable mines are to be closed, and insisted on hands-on outside monitoring to close off loopholes that might have allowed the money to be distributed through insider deals with Russian commercial banks. Objections by Russia’s partly privatized Rosugol company, which would have preferred the details to be left vague, delayed final agreement of the loan until June but, now that agreement has been reached, disbursement of the loan is proceeding with unusual speed.
Yasin Says Russia Ready to Meet IMF Demands.