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. Last Updated: 07/27/2016

Farewell to a Cautious Optimist

When Thomas Wolf took over the Moscow office of the International Monetary Fund in February 1995, on the eve of the fund's first multi-billion-dollar loan to Russia, he faced a grilling from doubtful diplomats and journalists.


"So many people were skeptical that this thing was going to work effectively," Wolf said this week. "They'd say, 'Look, those people have a horrible track record. What makes you think this time it's going to work?'"


The veteran economist's response was that a consensus had emerged between the Russian government and the Central Bank which, along with a set of strict conditions demanded by the IMF, made him "cautiously optimistic" that reforms could succeed here.


It's the same prognosis Wolf gives now, as he prepares to conclude his two-year term in Moscow on Saturday and return to Washington. Martin Gilman, his successor, is left to oversee work on a 1997 economic program that will see an additional $3 billion in IMF money channeled to Russia.


"The jury's still out on this," said Wolf, 56, in an interview in his seventh-floor office overlooking the Kremlin. "It will be out for another 10 or 20 years."


But as long as Russia largely meets the strict targets set by the IMF, "our money is being well spent. ... They've done a lot of good things."


In his position as point man for the fund, Wolf earned high marks from Western observers for management skills and accessibility while implementing the financial program.


"He's done a good job in establishing good relations with the Russian side," said one economist who has worked with him.


Like many, Wolf sees Russia's conquering of inflation in the last two years -- from almost 18 percent a month in January 1995 to the 0-to 2-percent monthly level in the last year -- as its foremost achievement.


"That means that the man in the street now has a lot more day-to-day certainty about the purchasing power of his currency," Wolf said. He acknowledged, though, that Russians have been slow to demonstrate confidence in the ruble by converting their dollar savings needed for investment and economic growth.


Inflation was tamed because the government finally agreed with the Central Bank on the need for a tight monetary policy.


"The whole level of sophistication of their policies and everything is just so much higher than it was when we first started working here in 1992," he said.


The trick now will be improving tax collection, the biggest thorn in the side of the three-year, $10 billion Extended Finance Facility loan agreed on in February 1996. Federal revenues plunged from 16.5 percent of gross domestic product in 1992 to 9.5 percent last year, a "major problem that's got to be reversed," Wolf said.


Although the IMF had watched tax collection slide throughout 1995, it did not halt any payments under its monthly monitoring regime until July 1996. Most economic criteria were being met satisfactorily, and the fund faced pressure from Western governments not to do anything that might jeopardize President Boris Yeltsin's chances for a second term.


"Some people said why didn't you blow the whistle before the presidential election," Wolf said. "I'm not going to answer that question."


A former Ohio State University economics professor who joined the IMF in 1984, Wolf now returns to headquarters in Washington, where he will work in the office coordinating programs for the Commonwealth of Independent States. He will have special responsibility for one country, most likely Belarus.


"It's been one of the most interesting jobs I've ever had," Wolf said, citing his duties running the Moscow office, overseeing monthly review delegations, and handling relations with investors and the press. But while he will miss Russia, he said he is "ready to go back" to America and rejoin family.