08/01/1998 16:39:18 IMF hails Russian anti-crisis plan progress
By Brian Killen
MOSCOW, Aug 1 (Reuters) - The International Monetary Fund on Saturday hailed
signs of progress by the Russian government in implementing an anti-crisis plan
but warned against complacency that could jeopardise future credits.
IMF First Deputy Managing Director Stanley Fischer told reporters that
revenues were rising and spending was being controlled, and if this progress
continued there should be no problems with the release of the next tranche of
"The agreed measures are being implemented as expected," he said after talks
with senior government and central bank officials.
"We already have preliminary information that the results of July are better
than those of June," he added, referring to the critical area of budget
However, Fischer reminded the Russians of what he described as the IMF's
unofficial motto. "Complacency must be avoided."
"There is still a lot of work to be done in implementing the programme in
the next weeks and months. The government is well aware of what needs to be done
and is doing it."
The Kremlin's top international finance negotiator Anatoly Chubais said
progress was being made in tackling a financial crisis that had sparked fears of
a devaluation or debt default.
"Budget income in July was higher than in June this year and July of last
year. There is certainty that the (anti-crisis) measures will be implemented in
full," he said.
"The situation is still difficult. It is clear that the main danger has been
overcome. The question of devaluation is not on the agenda," he added.
Fischer said the IMF's executive board would probably meet in late September
to consider the next tranche of the $11.2 billion in new credits agreed for this
The first tranche of $4.8 billion was approved on July 20 -- $800 million
less than planned because of delays in implementing measures. A third tranche of
$2.1 billion is due in November.
Fischer said the outcome of the September board meeting would depend on what
happens in August. "Good progress has been made, and if it continues that way
the outcome will be good."
He said that during his visit to Moscow he reviewed all of the steps that
need to be taken to reduce the budget deficit.
The government aims to cut the deficit to 2.8 percent of gross domestic
product in 1999 from 5.6 percent this year, but it has been struggling to
improve its tax collection rates and to service a heavy domestic debt burden.
The IMF accounts for the lion's share of a bailout package for Russia agreed
last month and totalling $22.6 billion. World Bank and Japanese credits are also
included in the total.
Fischer arrived in Moscow on Friday, when he met Chubais and Prime Minister
Sergei Kiriyenko. He was due to leave on Sunday.
His visit coincided with the activation on Saturday of the government's
package of anti-crisis measures, many of which President Boris Yeltsin signed
into law late on Friday.
The president signed the core of a new tax code aimed at simplifying the
complex system, approved casino and gaming taxes, withdrew subsidies to closed
cities and approved other tax changes including a cut in profit tax to 30
percent from 35 percent. Another measure changed the budget code.
On Saturday, the amount of individual income deducted in contributions to
the state pension fund rose to three percent from one percent and the number of
foodstuffs and children's goods benefitting from reduced rate value added tax
Fischer had earlier met the hardline new head of Russia's state tax service,
Boris Fyodorov, who may have passed on the good news that Gazprom, the natural
gas company which is Russia's biggest firm, had paid all its taxes for July on
time, averting threatened sanctions.
Gazprom said in a statement however that it was in turn owed large sums by
state gas consumers, highlighting a vicious circle of debts which the government
wants to break.