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. Last Updated: 07/27/2016

IMF, Russia Disagree Over Loan Timetable

Disagreement over the timetable of the tranches of a $6.3 billion standby loan is the last major hurdle in months-old talks between Russia and the International Monetary Fund, top Russian officials said Thursday.


The officials said Russia wanted the standby loan to be disbursed in quarterly installments, whereas the IMF wanted it to be released monthly, suggesting "intensive care" treatment for Russia's inflation-hit economy.


The officials, who asked not to be named, said monthly tranches would be humiliating for Russia. The loan carries tough conditions on monetary and fiscal policy, according to which Russia's performance will be closely scrutinised by the fund.


The officials said Russia is hoping to receive an initial $3 billion portion of the loan over a period of six months.


Moscow wants this amount to be released in quarterly tranches worth $1.5 billion each, against the monthly installments of $500 million preferred by the IMF, the officials said.


A senior IMF delegation is in Moscow for what is widely seen as the last stage of negotiations over the loan, which would be the biggest fund credit ever to Russia. The IMF has so far extended to Russia credits worth $4 billion.


Prime Minister Viktor Chernomyrdin told reporters Thursday during a visit to London that Russia had met the conditions required for the loan, and that an agreement could be reached within the next few days.


IMF Managing Director Michel Camdessus is expected to visit Moscow this month, once the fund team has reached a deal with the government over the loan. No date has been announced for the visit.


An IMF deal would spur restructuring talks with Russia's Western creditors,who are owed more than $120 billion.


Moscow has already deposited $100 million in a trust account at the Bank of England as part of a total of $500 million it owes commercial banks in interest arrears from 1992 and 1993. It was the first payment in three years to commercial banks, which were promised all the arrears by the end of this month.


Approval of the IMF loan would also pave the way for fresh Paris Club negotiations on official debts of close to $40 billion. Banking sources say talks with the Paris Club may start in May.


Russia has promised the IMF to cut monthly inflation to below 2 percent by the end of 1995, compared to 17.8 percent in January. It has also pledged to stick to a tight budget, with a deficit of less than 8 percent of gross domestic product.


Bankers expect inflation to continue to fall steadily, thanks to a Central Bank credit crunch. Money-supply growth, an indicator of future inflation, was nil in January.