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. Last Updated: 07/27/2016

Russians Say IMF Head Favors Loan

WASHINGTON -- Michel Camdessus, managing director of the International Monetary Fund, plans to recommend an additional $4.5 billion in loans to Russia to keep it from defaulting on earlier outstanding IMF loans, Russian officials said.

If the IMF board agrees, as is likely when the proposal is made in two weeks, Russia will be able to borrow $1.9 billion this year and $2.5 billion more the following year, Russian officials said. The new loans would keep Russia from failing to make scheduled payments on its old IMF loans, and thus avoid a huge embarrassment to both Russia and the fund.

Before the IMF board votes on the recommendation, Russian officials must also give the fund a copy of an audit of the Central Bank's dealings with an obscure offshore investment firm and take any "corrective actions'' recommended by the auditors, an IMF official said.

The audit, by PricewaterhouseCoopers, concluded that the Central Bank misreported its foreign currency reserves to the IMF by $1 billion in 1996. The auditors found the Central Bank lent the money to the Russian government and then dispatched the government's note to Financial Management Co., a firm based in the Channel Islands that started with $1,000 in capital.

State Duma Deputy Nikolai Gonchar, who has followed the controversy, said last week that a previous audit had warned the Central Bank against dealing with that firm.

The IMF official said Russia must take other steps before the board's vote, but did not elaborate.

Deputy Finance Minister Oleg Vyugin said Tuesday that one of the fund's main requirements was that his country pay down its overall IMF debt, not increase it. Russia owes a total of $16.5 billion and will repay $4.4 billion this year, Vyugin said.

Russia is also hoping the board of the World Bank, due to meet July 22 and 23, will approve more loans to help coal mining regions and further social reform.

The World Bank tends to follow the IMF's lead on Russia, and will not disburse any money under the loan programs unless the IMF board meeting agrees to resume lending to Russia.