IMF to relax conditions for fresh aid to Russia

THE International Monetary Fund is ready to relax some of its strict economic conditions for releasing fresh funds to Russia, provided that there is visible evidence of progress in curbing inflation and pressing ahead with economic reform.

A team of IMF experts will arrive in Moscow next month to help Russia rework its social safety net to help the poor, the elderly and the unemployed to cope with the pain of economic reform.

In its loan negotiations with Russia and other potential borrowers, the IMF sets targets for indicators like domestic credit expansion and inflation (running at 15 per cent or more each month) to help ensure that economic reforms remain on track.

But Ernesto Hernandez-Cata, the IMF's deputy director, revealed a new flexibility in interpreting the targets following a stinging attack on IMF Russian policies by Al Gore, the US Vice-President, after the surprising parliamentary victory of the far right.

'We're not obsessed by mathematical precision in these negotiations. The idea is not absolute adherence to a mathematical target, but to ensure that we're making visible and rapid progress toward stabilising the economy,' Mr Hernandez-Cata said.

He said that the team would provide Russia with advice and technical assistance on how best to proceed.

While the mission has been planned for some time, the visit is likely to be welcomed by critics calling for a shift in the IMF strategy for helping Russia.