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. Last Updated: 07/27/2016

Bentsen Praises Progress in Reforming Economy

U. S. Treasury Secretary Lloyd Bentsen, on a three-day visit here, gave Russia a glowing political and economic report, praising its progress in controlling inflation and pushing ahead with privatization.


"I see remarkable change in Russia", Bentsen told a news conference Friday. "I see Russia undergoing a revival and a renewal'".


But Bentsen warned that inflation was still too high and that Russia needed to continue its massive sell-off.


"Inflation must be stopped", he said. "The economy has to be stabilized. Privatization must be completed and the structural reforms take place".


Bentsen's visit, on the eve of the Constitutional Assembly, follows the surprising victory by President Boris Yeltsin in the April referendum, the splintering of the conservative parliamentary opposition and the signing of a key agreement over monetary policy with the Central Bank.


Yeltsin also signed a moratorium Thursday on increases in government spending.


A senior U. S. Treasury official, at a briefing following Bentsen's speech, emphasized U. S. pleasure with the changes.


"Our feeling is that the political and economic situation today is better today than even optimists could have expected six months ago", the official said. "They are no longer on the brink of hyperinflation".


The inflation level in April hit 17 percent, a drop from 20 percent in March, and well below the 50 percent monthly threshhold that defines hyperinflation.


Bentsen had been scheduled to meet with President Boris Yeltsin on Friday, but Yeltsin cancelled the meeting. Yeltsin spokesman Alexander Parfyonov said the president was busy with preparation for the Constitutional Assembly.


A Treasury Department spokeswoman rescheduled "tentatively" for 10 A. M. Saturday. However, Yeltsin was expected to give the opening speech at the Constitutional Assembly at the same time. A spokesman at the U. S. embassy could not explain the conflict. Bentsen is due to leave Russia on Saturday afternoon.


At the news conference, Bentsen appeared to take the cancellation in stride, saying "It's a very busy time" for Yeltsin and that he was confident it could be rescheduled.


Bentsen said that Russia could qualify this year for further assistance from the International Monetary Fund beyond the money it is slated to receive under special conditions set up for the country last month.


"I would anticipate before the year is out, yes" Russia could qualify for funds under the IMF's standard procedures.


The Central Bank agreement with the government to control the growth of money supply and bring inflation down to 10 percent monthly by December paved the way for the IMF to deliver $1. 5 billion in assistance perhaps as soon as this month under the special conditions. Another $1. 5 billion could be delivered by the fall.


But if Russia meets the tougher conditions of a so-called stand-by agreement, it could qualify for an additional $3 billion of IMF aid this year.


Earlier in the day, Bentsen met with deputy prime ministers Boris Fyodorov and Anatoly Chubais, the two leading reformers in the government, in which he praised the country's privatization efforts.


Bentsen said that efforts were proceeding to provide aid to Russia through the Group of Seven and that a special office would be opened in Moscow to coordinate the assistance.


The senior Treasury official said he was "cautiously optimistic" that a U. S. -led program to create a $4 billion fund for newly privatized enterprises would be in place in time for the Tokyo G-7 summit in July. But he said the negotiations were hampered by budget constraints among the donor countries and the difficulties of setting up a new institution to provide the aid.


The U. S. has agreed to provide $500 million to the fund and is looking for the G-7 to contribute $2 billion.