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. Last Updated: 07/27/2016

IMF Praises Successes Of Economic Program




The International Monetary Fund praised Russia's economic success Wednesday and the finance minister, opening talks with the fund, said he was sure of getting the next tranche of a $4.5 billion loan on schedule.


"At the beginning of September we should meet all the conditions, and at the end of September we plan to get the next regular $640 million tranche," Finance Minister Mikhail Kasyanov said at a news conference.


The head of the IMF mission confirmed Russia was fulfilling the economic program underlying the loan.


"No one, not even we, expected such successful results of the implementation of the economic program of Russia," Prime-Tass news agency quoted Gerard Belanger, deputy head of the IMF's Second European Department, as saying.


Kasyanov also said the loan would not be hostage to an international scandal over alleged money laundering.


The Wall Street Journal reported this week that an investigation was launched into the use of previous IMF credits to Russia as part of a suspected Russian money laundering scheme through the Bank of New York.


The IMF has said it is investigating the claims, though its credits to Russia were sent to accounts at Western central banks rather than commercial banks.


Kasyanov said Russia had used every cent of IMF aid as agreed and all had been accounted for. "The government has all of the reports on the accounts where at each moment every ruble or every dollar has been channeled."


The fund has been reluctant to criticize the government's use of fund loans despite several abuses recorded in a report recently published by Central Bank auditors PriceWaterhouseCoopers on the Central Bank subsidiary FIMACO.


The Prosecutor General's Office caused an uproar early this year when he revealed that over several years $50 billion dollars had been handled by FIMACO, a shelf company located in the British Channel Island of Jersey.


The PriceWaterhouseCoopers report said the Central Bank had used double-bookkeeping to help conceal its use of FIMACO funds, including some originating from the IMF.


The auditors wrote that the Central Bank had used as much as $1.2 billion of its reserves for insider trading on the risky state treasury bill market in 1996, much of it through Evrofinans, a Russian firm part-owned by FIMACO and Eurobank. Investing Central Bank reserves in short-term, risky, ruble-denominated bonds like GKOs violates both Russia's agreement with the IMF and Russian law.


The report said the Central Bank had granted some $300 million in credits through FIMACO to commercial banks from hard currency reserves.


Eurobank, the Central Bank's Paris-based subsidiary that owned and managed FIMACO, had denied the auditors access to numerous needed documents, including those that established the investment regulations for the IMF funds, the report said.


The IMF board is scheduled to meet on Sept. 20 to discuss disbursal of the $640 million tranche, said Oleg Zhukov, spokesman for Russia's envoy to international financial organizations.