IMF Agrees to Loan $10.2 Billion To Help Russia's Ailing EconomyBy Lee Hockstader
The Washington Post
The International Monetary Fund agreed Thursday on a $10.2 billion loan package to help Russia's struggling economy over the next three years, providing an enormous boost for President Boris Yeltsin on the eve of his reelection campaign.
If approved as expected by the fund's executive board, the deal - bigger than any IMF loan except the bailout for Mexico last year - will begin in April to pump more than $300 million a month in credits into the Russian economy during the critical run-up to the first round of presidential elections scheduled for June 16. It would also allow Yeltsin to meet his promise to pay about $2.8 billion in back wages owed to workers in state enterprises in March.
By mid-July, when some analysts think Yeltsin will face Communist Party leader Gennady Zyuganov in a runoff election, the IMF program will have delivered about $1.3 billion to Russia - a massive fiscal shot in the arm for the president at a crucial political moment.
The fund's managing director, Michel Camdessus, dismissed suggestions that the IMF intended to help the Russian leader survive a strong Communist challenge, declaring in a news conference: "We do not take sides. We have a program, we have a country which needs support. It is our duty and moral obligation to support this country."
Camdessus said the IMF would continue its massive help for any elected government of Russia that stuck to the agreement reached Thursday, and he suggested that if a new president takes power he will be "confronted with the hard realities of this country" and forced to stay on course with reforms.
Nonetheless, Camdessus issued a thinly veiled warning to the Communists, whose program of massive social spending, renationalization of industry and a beefed-up role for the central government hardly squares with the fund's objectives. "If they don't comply with the commitments of Russia established in these documents, our support would be interrupted," he said flatly.
A deal between the IMF and the government had been widely expected, not least because it had previously been endorsed by President Clinton and German Chancellor Helmut Kohl. Still, the agreement announced Thursday exceeded expectations both in the size of the package - initially pegged at $9 billion by the IMF - and the speed with which it was agreed to.
Government officials made no effort to hide their glee at reaching an agreement on a deal that will help them make good on at least some recent spending promises.
As in the previous IMF loan package, this one will be delivered in monthly dollops and fund officials will review Russian compliance with the agreement before each new credit is extended.