Russia to Get IMF Loan of $10 Billion

In the third Western show of solidarity with embattled President Boris N. Yeltsin in as many days, the International Monetary Fund’s managing director Thursday announced a $10-billion loan to get the stalled Russian reform cause rolling.

While Western governments fearful of a Communist comeback in June presidential elections insist that they would never interfere, IMF Managing Director Michel Camdessus joined German Chancellor Helmut Kohl and President Clinton in taking action interpreted by many here as an endorsement of Yeltsin.

Camdessus arrived Wednesday for what was to be four days of negotiations with government officials to determine whether recent flirtations with reform backtracking warranted a more tightfisted policy by the global lender.

After just one day of meetings with Yeltsin, Prime Minister Viktor S. Chernomyrdin and a newly appointed economics team of questionable reform orientation, Camdessus announced that he was fully satisfied with the Kremlin’s commitment to take the next steps toward a market economy.

A rolling review provision gives the IMF leverage to suspend credit in the event the political leadership fails to live up to its fiscal austerity commitments.

Camdessus insisted that the IMF is not in the business of making political judgments, but said that if Russia makes inflationary or budget-busting moves, the fund will reconsider future allotments.

“If a new government arrives, we think that when confronted with the hard realities of this country, it will certainly consider this program the best possible for the country,” he said in announcing the loan approval.

“If they continue implementing it, they will have full support. If they consider that this is bad, well, it will be their sovereign choice, and we will respect this choice. But, indeed, if they don’t comply with the commitments Russia established in these documents, our support would be interrupted.”

Camdessus sprinkled his explanation with uncharacteristically leftist asides, noting the pressures on Yeltsin to improve the lot of pensioners and settle billions of dollars worth of wage arrears to state workers.

In return for the IMF’s new pledge of support, the Russian government promised to abolish all export tariffs on gas by March 15 and on oil exports by July 1, and to live within the revenues of the federal budget.

The IMF a year ago approved a $6.8-billion standby loan to Russia despite Yeltsin’s costly war against Chechen separatists and what was then a weakening ruble, making the monthly allotments conditional on measured progress toward economic stability.

Then, as now, the IMF faced the Hobson’s choice of approving the funding despite concerns the Kremlin was overspending, or withholding it and further undermining the political position of those still championing economic and democratic reform.

Influential foreign leaders have been sending signals of support for Yeltsin. Kohl on Tuesday ended a three-day visit to Moscow with heaps of praise for the ailing, 65-year-old Yeltsin. Clinton called the Russian president a day later to express support for his reforms.