IMF agrees terms of $4.5bn loan to Russia

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The Independent Online
THE INTERNATIONAL Monetary Fund has agreed terms of a $4.5bn loan to Russia, its first since it cut off lending to the country in the wake of the government's debt default last August, writes Lea Paterson.

Michel Camdessus, IMF managing director, warned Russia the loan was conditional on fiscal, financial and structural reforms, including revisions of banking laws, improved tax collection and assurances the money will not be misused.

Speaking in Washington, Mr Camdessus said: "As soon as the measures are implemented and I have received the necessary assurances, I shall ask the executive board to consider Russia's request for a standby arrangement of $4.5bn over 18 months, of which $3bn would be in the first 12 months."

The loan, which fell slightly short of expectations, is likely to be part of a $7.5bn package, with money promised by other lenders, including the World Bank. Once debt rescheduling is taken into account, the total package is likely to total $24bn.

Russia is unlikely to meet several of the IMF conditions. But analysts said the political pressure to bail out Russia was so great the money may be released without implementation of all the requisite reforms.