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. Last Updated: 07/27/2016

G-7 Skeptical on Reform Course

KRONBERG, Germany -- Russian plans to tame runaway inflation and achieve economic stability have drawn a sympathetic but skeptical response from the world's leading industrialized nations, who urged Moscow to stay the course of vigorous reform.


Meeting in a 19th-century manor house near Frankfurt on Saturday, finance ministers and central bank governors from the Group of Seven offered no new aid initiatives but reaffirmed their commitment to disburse $44 billion in assistance pledged to Russia last year, if Moscow continues the painful conversion to a free market economy.


Economics Minister Alexander Shokhin, one of three top Russian finance officials attending the conference, affirmed his government's commitment to reform while acknowledging that the political ascendancy in Moscow has hampered the wholesale dismantling of the Communist system.


Shokhin also argued that Russia's recent efforts in brokering a cease-fire in Sarajevo showed the country remains a superpower deserving equal treatment from the G-7. The Russians also indicated that Moscow hopes to become a member of the General Agreement on Tariffs and Trade this year and hopes to create a free-trade zone with Western Europe by the end of the decade.


Finance Minister Sergei Dubinin predicted that inflation by the end of 1994 will be reduced to between 7 percent and 9 percent a month, compared to the current rate of about 22 percent. Dubinin also said the Russian budget deficit, now at roughly 10 percent of gross domestic product and a major contributor to inflation, should be slashed to 5 percent of GDP by year's end.


U.S. Treasury Secretary Lloyd Bentsen, who called himself "a little less pessimistic than I've been in the past," was still skeptical about Dubinin's goals, "considering where they are now."


Others echoed Bentsen. German Finance Minister Theo Waigel, who hosted the meeting, told reporters that "there was a lot of critical probing" of the Russian plan by the group's representatives. "There was no sense of deep conviction that these reforms can be carried out," Waigel added.


"We got the impression that they're trying," said Hans Tietmeyer, head of the German Bundesbank. "The question is whether the political structures will permit them to succeed."


The G-7 -- Britain, Canada, France, Germany, Italy, Japan and the United States -- expressed willingness to support debt restructuring for Russia.


American officials said there was no progress in the other issue overshadowing Saturday: the trade dispute between the United States and Japan. Bentsen this morning met for an hour with Japanese Finance Minister Hirohisa Fujii to discuss Tokyo's import regulations.