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. Last Updated: 07/27/2016

IMF Team Leaves, Loan Still Pending

An International Monetary Fund team negotiating a $9 billion loan to Russia left Moscow on Wednesday with the broad outlines of an agreement, but final talks are expected in the next two or three weeks.


It appeared that the essential remaining issues would top the agenda for talks Wednesday in Washington between Prime Minister Viktor Chernomyrdin and IMF managing director Michael Camdessus, but sources did not indicate an announcement of the expected three-year loan was imminent.


In a joint communique issued in Moscow by the Finance Ministry and the Central Bank, Russian officials said that both sides had reached understandings on most aspects of the three-year loan, called an Extended Financing Facility. Targets include reduced inflation, economic growth and institutional changes leading to "greater economic efficiency and policy effectiveness."


"The two negotiating teams intend to report to their respective authorities on all aspects of the understandings reached so far, and on the issues to be settled," the statement read.


A Finance Ministry source said that while the talks are finished at a technical level, the remaining issues involve prior actions which the Russian government must take to prove its resolve, such as the passage or abolition of certain decrees or setting official growth targets.


Until these actions are taken, the actual loan documents will not go before the IMF's board of directors, the source said.


"The document is only ready for signing when the IMF considers that the prior actions that the government will take are sufficient," he said. "Only then will the IMF say; 'O.K., go ahead and sign the document.' The second thing is that, depending on what he IMF says, there may be minor changes to the document."


The joint statement also said the next round of meetings will be held in two or three weeks aimed$at finalizing discussions.


IMF and Russian officials began their most recent negotiations Jan. 17 amid widespread speculation that both sides would sign off on the EFF -- a medium-term loan aimed not only at continuing monetary reforms but also at structural reforms in sectors such as banking or land reform.


However, the waters were muddied after the Russian lead negotiator, First Deputy Prime Minister Anatoly Chubais, resigned amid condemnation from President Boris Yeltsin.


Adding to the confusion have been several presidential decrees calling for billions of dollars to be spent on social services, rebuilding Chechnya and ensuring payment of Russian workers, any of which could prove to be inflationary and thus undermine a major IMF objective.