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. Last Updated: 07/27/2016

Minister: IMF's Days Of Teaching Finished

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Russia can't learn anything more from the International Monetary Fund and, in fact, the IMF should be learning from Russia, Deputy Economic Development and Trade Minister Arkady Dvorkovich said Tuesday.

Dvorkovich said that Russia no longer needs IMF money and "politics" is the only reason the government needs the IMF's approval for its economic program. He said the IMF was "getting slow" in learning from the country's current economic program.

Dvorkovich was speaking alongside current IMF adviser and former IMF chief envoy to Russia Martin Gilman at a Finance Ministry seminar.

Gilman said he was surprised last month when the government turned down an IMF loan offer and didn't announce "almost a victory after almost 10 years of IMF guidance."

Dvorkovich dismissed predictions that Russia will need IMF money when its external debt repayment schedule balloons to $18 billion in 2003, saying a major restructuring was unlikely because "difficulties connected with restructuring exceed the benefits of that restructuring."

"If before 1998 Russia's main motivation in negotiating with the IMF was money, this year money stopped being the motivation — it isn't needed anymore. … The conclusion is that after 10 years the evolution has happened," Dvorkovich said.

Russia owes some $11 billion to the IMF, 1 1/2 times the fund's "country quota." According to the terms of the IMF loans, any country with debts exceeding this quota has to get the fund's approval for its economic policy at least every six months, unless it has a formal agreement to the contrary.

Prime Minister Mikhail Kasyanov said Saturday that by the end of the year debt to the IMF would be under the quota and "Russia will be working within the IMF like a normal country, like countries of the G-8," Prime-Tass reported.

Dvorkovich criticized the IMF's track record in Russia, especially its insistence on a one-size-fits-all economic program that ignores the "real situation in the country."

A prime example of this flawed approach, he said, was the fund's "stubborn" insistence that increasing tax collection be a top priority of the state — even after the 1998 financial meltdown, when there was a lot more to worry about than taxes.

Between 1992 and last year, the government had no idea about its economic program, which was drafted very spontaneously, Dvorkovich said. "But, at least, for the first time, the government has written its economic program by itself," he said. "Russia is not defending itself anymore. It learned and now knows its position well."

The criticism at the seminar, however, went both ways.

Gilman, who left his IMF post in February to teach at the Moscow University's Higher School of Economics and write a book about IMF-Russia negotiations over the last decade, had plenty to say about Russia's performance as well. "Each country has their own method of formulating its economic program and discussing it with the IMF. But Russia's method is rather unusual," Gilman said.

Unusual, he said, because Russia used to send either a deputy prime minister or a special representative to negotiate with the IMF, while most countries send their finance minister, central banker or head of state.

To its credit, Russia recently changed that by naming Finance Minister Alexei Kudrin as head of negotiations with the IMF, Gilman said.

Despite this, however, the IMF "continues to be disappointed with the lack of completeness in Russia's economic policy and the lack of resoluteness in the government," he said. "The difference between words on paper and words spoken and what Russian authorities actually do leads to misunderstandings."

One of the reasons for this, he said, is that the Russian government hasn't fully emerged from the Soviet Union's shadow. An example of this was last year's high world oil prices, which put Russia in the very uncommon situation of having more money than it knew what to do with, Gilman said.