IMF set to agree new $4.8bn loan for Russia

THE INTERNATIONAL Monetary Fund is expected to agree to a massive new loan to Russia in the wake of the weekend Nato summit and tomorrow's Group of Seven finance ministers' meeting in Washington.

This week is also likely to bring proposals to reform the international financial system, and an agreement by leading industrial nations to increase the amount of debt relief for the poorest countries. The aim is to have specific measures to put to G7 leaders at their annual summit in Cologne in June.

Michel Camdessus, IMF managing director, said there would be good news on the contingent credit line, an overdraft facility for countries meeting certain standards if they face financial market pressures. "We intend to create the right incentives for avoiding crisis."

Mr Camdessus has denied the IMF is under political pressure to bend its lending rules for Russia. But his remarks about the prospect of a new lending agreement have taken a more optimistic turn in the run-up to the current meetings.

The loan is expected to be $4.8bn, enough to allow Russia to pay the interest due this year on its existing $20bn of IMF loans received over the past eight years. This includes last July's emergency package which failed to prevent Russia's default and the devaluation of the rouble the following month.

A resumption of lending, suspended since August, will depend on Russia agreeing to much tighter budget policies and an immediate plan to restructure the banking system.

IMF forecasts last week painted a dismal outlook for the Russian economy. Its "World Economic Outlook" predicts a decline of 7 per cent in GDP in 1999, after a 5 per cent fall last year. Inflation will reach 100 per cent before declining to 20 per cent in 2000 - assuming reforms are implemented and work.

The agendas for the G7 and IMF meetings include reform of the global financial system. In addition, the US Treasury sent a clear signal that emerging economies should not try to hang on to fixed exchange rates when these come under any pressure. The IMF should not lend for the purposes of defending an exchange rate in future, Mr Rubin said.

Start your day with The Independent, sign up for daily news emails
Sport
England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
Arts and Entertainment
Ricardo by Edward Sutcliffe, 2014
artPortraits of LA cricketers from notorious suburb go on display
News
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'