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. Last Updated: 07/27/2016

IMF Visit Unlikely to Bring Loan


WASHINGTON -- An International Monetary Fund mission will likely return to Moscow for talks this week, sources have said, but the team is unlikely to approve the release of a $10 billion loan halted last month.

The fund wants to make sure Russia has succeeded in boosting depressed tax revenues before allowing Moscow to draw further on a $10 billion IMF loan granted earlier this year, sources said Friday.

The Russian Central Bank announced that the IMF delayed the latest monthly disbursement of the loan in late October because of Russia's poor performance in collecting taxes.

The government's emergency tax commission, formed last month to address the crisis, has threatened bankruptcy proceedings against three companies with big tax arrears and also launched a tax-evasion case against Almazy Rossi-Sakha, Russia's main diamond exporter.

Commersant Daily reported Wednesday that finance minister Alexander Livshits had also launched investigations into two other companies -- the Federal Food Company, a grain and food buying company for state needs, and the Moscow Medical Insurance Fund, which collects and distributes compulsory medical payments in the city.

According to the report, the Federal Food Company had borrowed 2.7 trillion rubles ($500 million) using government guarantees but had failed to use the money to buy food and fill government contracts. The report charged that the insurance fund had improperly spent over 500 billion rubles on purposes unrelated to medical insurance.

The tax crisis, which has seen state revenues fall by about 30 percent below budget, has forced the government to delay wages and other payments although presidential press spokesman Sergei Yastrzhembsky said last week that October had seen a slight improvement in tax collection.

The government took steps Wednesday to meet demands from workers who staged a national protest last week to complain about non-payment of wages.

It promised to repay its own 1.2 trillion ruble wage debt by Nov. 15 to workers in education, health, culture, the mass media, the bureaucracy, the federal courts and the prosecutor's offices.

Although the Kremlin itself has washed its hand of this debt, it did set a Nov. 15 timetable for repaying debts to the coal industry which would help speed up miners' wages.Meanwhile, Russian plans to ease the budget crisis by issuing up to $500 million of Eurobonds this year looked to be on-track with officials confirming that the road show to market the bonds would begin Monday in world financial centers.

Alexander Lebedev, chairman of National Reserve Bank, one of Russia's top 10 banks, told Interfax last week that the government had created a consortium to issue the bonds including two Russian banks -- National Reserve Bank and the International Financial Corporation -- with lead managers J.P. Morgan and SBC Warburg.

He said between $300 million and $500 million worth of bonds would be sold by the end of 1996 or early 1997.

Presentations of Eurobonds will be held Nov. 11, simultaneously at all international financial centers, a spokesman for the Finance Ministry told Interfax. Though the exact date of their issue on the open market is not yet fixed, "it may happen at any moment," he said.

Despite the uncertainty around the IMF loan, Russian officials told Interfax that the recent decision by leading credit rating agencies to grant Russia a BB- grade and by progress on restructuring existing debts would help the Eurobond sale. ()