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. Last Updated: 07/27/2016

Kudrin Tells IMF To Keep Its Money

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Russia has rejected a loan agreement with the International Monetary Fund because the country doesn't need the money or the fund's binding policy advice, the finance minister said Wednesday.

The one-year, standby loan offer had prompted complaints from Russian officials that the terms were too strict for a meager offer.

"Having considered our possibilities, we made the decision not to conclude a full cooperation program with the IMF for a year," Finance Minister Alexei Kudrin was quoted as saying by Interfax.

Kudrin said Russia had no need for the funds and did not want to be "under the constant control of the IMF."

The fund's Moscow office declined to comment on the report.

The rejection was a role reversal in Russia's decade-long relations with the IMF, which has for years dangled loan programs before Russia, and used the threat of withholding funds to encourage economic reform.

Russia has repeatedly failed to meet reform promises. Meanwhile, the country has made windfall profits from high world prices for oil, Russia's major export, over the past year and has been less desperate for foreign loans.

Finance Ministry spokesman Gennady Yezhov said Wednesday that Russia had agreed to adhere to the IMF agreement's principles, but would not sign a formal accord.

"The program will be followed through, but it won't be made formal," he told Dow Jones Newswires. He did not elaborate.

The IMF offered Russia a one-year standby arrangement, under which no money would have been provided unless the country's economy took a sharp turn for the worse. But the accord would still have required the Russian government to implement policies it has resisted for years, such as charging market rates on central bank loans to the government and tightening banking supervision.

Russian media have in recent days cited officials as saying the IMF is offering too little and demanding too much.

Russia initially pursued a deal with the IMF last year because an IMF-approved economic policy was necessary as a precondition to opening talks on a separate loan rescheduling plan with the Paris Club of sovereign creditors. When talks with the Paris Club stalled in February, the IMF deal lost urgency. Russia had requested a three-year loan program that would have helped in its bid to reschedule other foreign debts. But the IMF turned down that request, saying a longer loan program could be approved after the one-year program was successfully completed.