Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

New Loans Give Boost To Yeltsin


The German and French governments Wednesday announced separate loan deals for Russia worth more than $3 billion in the second major pre-election Western financial boost for President Boris Yeltsin.

German banks will extend 4 billion marks ($2.7 billion) in new credits to Russia to support its reform process, a government spokesman in Bonn said, while France has given Russia a 2 billion franc ($395.5 million) loan also aimed at supporting the transition to a market economy, the Finance Ministry said in Paris.

The loans come on top of a three-year $10.2 billion package promised to Russia on Feb. 22 under an agreement with the International Monetary Fund, and finance programs in accord with the IMF package, German government spokesman Peter Hausmann said.

The IMF loan, which requires that Russia meet strict financial criteria, is expected to go before the Fund's board for approval next month.

Western governments have thrown their weight behind aid to Russia as worries have intensified that Yeltsin and his government could be replaced by the Communists after the presidential polls in June.

Yeltsin has made a series of populist pre-election spending pledges totaling billions of dollars, but he and other officials have pledged that Russia will not print money to pay for his campaign promises.

A first German loan of 3 billion marks will go for direct support of economic reforms being carried out by the Russian Federation, Hausmann said. A further 1 billion marks will be available to finance long-term projects in the common interests of Russia and Germany, he said.

Yeltsin affirmed to German Chancellor Helmut Kohl last month during a simmit in Moscow that despite the sacking of several reformers, the reform process would be continued and intensified, Hausmann said. ()