. Last Updated: 07/27/2016

IMF Loan Gives Rise To Economic Reform

A tough fiscal policy and reform of the tax system are the top priorities of a comprehensive three-year plan for economic reforms, according to a joint statement on economic policy by the Cabinet and the Central Bank.

The statement, approved by the government at a closed meeting two weeks ago and made public Tuesday, was a necessary condition for the $10 billion, three-year loan granted to Russia last week by the International Monetary Fund.

The statement projects an increase in gross domestic product of 2 percent to 4 percent in 1996 and 1997, and a further increase of up to 6 percent a year from 1997 until the end of the century, Interfax reported.

Monthly inflation is seen going down to 1 percent by the end of this year and falling further the next two years.

"This [the statement] is only an economic forecast, it's not an obligation to the IMF," Deputy Economics Minister Sergei Ignatiev said, adding that the government projections will become reality if "there are no radical shifts in the economic policy."

In Washington, IMF managing director Michel Camdessus defended the decision to grant the loan, saying that withholding it "would invite policy drift during the pre-electoral period, making the inevitable renewal of adjustment all the more painful," The Associated Press reported.

The government-Central Bank statement also lays out the concept of radical corporate and individual tax reform, which would include hikes in excise duties for oil, electricity and natural gas.

Tax returns by individuals rather than companies would become the basis of the new tax system, Kommersant Daily reported Tuesday. The Economics Ministry plans to introduce measures such as requiring tax declarations from buyers of any item costing more than $20,000, the paper said.