World

Russia Pleads For Quick Cash

By CBSNews.com staff CBSNews.com staff

December 1, 1998 / 2:38 PM EST / CBS

The head of the International Monetary Fund met Wednesday with top Russian officials who are still hoping to free up loans that were frozen when Russia's latest economic crisis hit.

Michel Camdessus met with Prime Minister Yevgeny Primakov, but Camdessus wasn't expected to announce the release of the loans that Moscow badly wants to pay off mounting debts.

Speaking to reporters Wednesday morning, Primakov sought to lower expectations.

"Don't measure the significance of Camdessus' visit by how much money he brought," Primakov said. "He has come with an attache case containing documents, not cash."

Primakov added that he was satisfied with his initial meeting with Camdessus. "We are exchanging opinions," he said. "You shouldn't think that the question of giving money to Russia will be solved now."

Russia owes billions of dollars to workers, pensioners and foreign creditors and wants the IMF to provide a new installment on a $22.6 billion bailout package that was negotiated in the summer, shortly before the latest economic crisis hit.

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But the IMF has been demanding a realistic recovery plan from the Russian government and has so far been unimpressed with Moscow's efforts.

The IMF put the loan installments on hold after Russia's government devalued the ruble and defaulted on some of its debts in August. Primakov's government has moved cautiously, refraining from any radical measures and hoping that the IMF and other lenders will offer help.

The government delayed a debate this week on next year's budget as it struggles to find ways to come up with enough money to meet expenses.

While the Cabinet insisted the delay was not connected with Camdessus' visit, Russian media have suggested the government put off action on the budget because it is still holding out hope of receiving IMF money. The latest budget draft assumes Russia will receive the IMF loan.

Moscow, which is also mired in a political crisis as President Boris Yeltsin's health wanes, says it may have to turn on the printing presses to meet its freign debts and pay off state sector wage arrears if the IMF doesn't come through with a bailout.

Such a move would likely incur further damage to the country's already precarious standing with foreign creditors.

An IMF mission left town last week saying the government's revenue forecast for next year was overly optimistic. It also disapproved of the government's intention to lower taxes, offer subsidies to ailing industries and increase state regulation of the economy.

First Deputy Prime Minister Yuri Maslyukov insisted Wednesday that Russia will go its own way and assailed the IMF for what he called its unfair assessment of the government's intentions.

"They assess every step toward reason as a step toward administrative controls over the economy," Maslyukov was quoted by the Interfax news agency as saying.

He said that Russia's main goal now is "to make the free-market economy socially-oriented by means of state regulation."

Russia has so far received only about $5 billion of the bailout package, which also involves the World Bank and the Japanese government.

Russia's economy has shrunk about 5 percent to 6 percent compared to a year ago and inflation is up an estimated 70 percent compared to last December, he said. The government will try to limit inflation to 30 percent next year, he said.