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. Last Updated: 07/27/2016

Officials Say G-7 Aid Unlikely to Be Used

The Group of Seven leading industrialized nations may repeat promises to send $28. 4 billion to Russia at its summit in Tokyo this week but it is likely to deliver substantially less, diplomats in Moscow said Tuesday.


Officials said that legal approvals, bureaucratic obstacles and tough economic conditions are likely to stand between the desire of donors to give and Russia's ability to accept.


They also said that Russia may not actually want much of what is being offered.


Top Russian officials, from Deputy Prime Ministers Alexander Shokhin and Boris Fyodorov to President Boris Yeltsin, have all said that the government is generally not interested in "tied" credits, which require Russia to buy products from donor nations. Such credits constituted the bulk of the 1992 foreign assistance.


The credits still constitute $10 billion of the $28. 4 billion promised at a G-7 meeting in April and the G-7 summit, which begins Wednesday, is expected to repeat them despite Russia's objections.


"If they make good on those statements you can already predict there will be some shortfall", said one Western diplomat in Moscow.


The G-7 in April promised Russia a $43 billion assistance package this year; $15 billion of that was in debt relief and the remainder was in a combination of old money not delivered in 1992 and new funds to be given this year.


A $6 billion slice of the money was in the form of a ruble stabilization fund from the International Monetary Fund, which was first promised last year. One official said that the fund is unlikely to be delivered this year because Russia will still not meet the required inflation and economic goals that would qualify it for the fund.


The IMF may, however, deliver another $4 billion this year.


The IMF already has given $1. 5 billion from a special program set up to aid Russia, which carried easier economic targets. Russia is likely to qualify for another $1. 5 billion this year. It could qualify for another $1 billion, but that would only be available under the tougher conditions of a "stand-by agreement", which the country was unable to meet in 1992.


But the prospects look brighter this year if the government continues to follow its plans to control inflation and spending.


"There is a very good chance they will qualify for a standby arrangement", said an official.


The difficulties in getting money into Russia are illustrated by the $5 billion worth of World Bank assistance promised to Russia in April.


About $1 billion of that is money that had been previously promised, and that money includes two loans, worth $160 million, that have already been approved by the bank and the Russian government to assist with privatization and employments services. But the money has not been disbursed because they lack the approval of parliament.


The $4 billion of new assistance will face similar obstacles. The amount and how it will be used have been agreed to by the Russian government and the bank's board, but checks are far from being written.


The program consists of several loans, each of which must be approved by the bank's board, the Russian government and the parliament. Like IMF assistance, Russia can only receive much of this aid if it hits certain economic targets.


"None of this is going to be very easy", said Charles Blitzer of the World Bank. Russia has already lost access to food assistance from the United States because it has missed payments on old loans.


Said one official at the U. S. Agency for International Development in Moscow: "A lot of the problem is figuring out what $28 billion you're talking about. That number is like the $24 billion from last year, it's a combination of apples and oranges that are not easy to count".