Russia has a good chance of receiving billions of dollars in new international loans that will help it stave off further default on its debt, a top official from the International Monetary Fund said today.
Michel Camdessus, the IMF's managing director, told an economic forum in St. Petersburg he is encouraged by figures that show Russia's industrial production and tax revenues are up while inflation is losing steam.
"Russia can count on our full support. We hope that the IMF will be able to continue credit lending to Russia," Camdessus said after meeting with Prime Minister Sergei Stepashin.
Russia needs more IMF loans in order to make the payments on its current IMF loans. The IMF offered in April to approve another $4.5 billion in loans over the next two years, but only if the Russian legislature adopted a package of 30 economic reform bills. The government is hoping that the Duma, the lower house of parliament, will adopt the measures before it goes on summer recess next week and an $800 million payment to the IMF comes due in July.
The reforms embodied in the bills are not particularly far-reaching -- the most important would give the government the tools to restructure insolvent banks, while new taxes on gasoline stations and luxury cars would boost tax revenue by about $320 million a year. But after approving loans in the past on mere promises of economic reform, the IMF this year decided to tie further financing to specific results. The World Bank is taking a similar stance.
Russia has slowly begun to recover from the past year's economic calamity, in which the government defaulted on some $40 billion in debt and abandoned its defense of the ruble, causing the currency to plunge. The country, a big oil producer, has benefited from the recent increase in oil prices. The ruble's devaluation, while it impoverished more Russians, also made foreign goods less competitive and created more demand for Russian goods at home. The stock market has partly revived. And this year's budget deficit is roughly half of last year's level.
Camdessus said today that in the long run, Russia's economic turnaround depends on major reforms, including disentangling the "incestuous relationships between governments, banks and enterprises" and reining in the underground economy. Stepashin said if Russia fails to solve its economic problems, it may become a world "outcast."
Camdessus's commitment to help Russia drove up the Russian stock market, which closed 4.4 percent higher. Stepashin said if the Duma adopts the IMF's reforms, he expects "concrete results" from the fund as early as next month.
CAPTION: IMF Managing Director Michel Camdessus listens to discussions during an economic forum in Russia.