IMF, Russia Fail to Reach Bailout Pact

Despite pressure from the Kremlin to act quickly, Prime Minister Sergei V. Kiriyenko and the International Monetary Fund were unable to reach agreement Sunday on a multibillion-dollar bailout designed to ease Russia’s mounting financial crisis.

The high-level negotiating session, billed by the Russian side as the “final stage” in its quest to obtain a foreign loan package of as much as $12.5 billion, adjourned after five hours with little more than the pledge of another meeting today.

The Russian government, wary of touching off investor panic when the stock market opens this morning, tried to put the best spin on the outcome, reporting that Kiriyenko and John Odling-Smee--the IMF’s chief negotiator--had agreed on all key issues.

“The sides have achieved agreement on all major questions of principal importance,” said a spokesman for the Russian government press service, according to the government-run Itar-Tass news agency.

Moscow has been eager to obtain the bailout, which officials say will be used to shore up the Central Bank’s depleted reserves and restore foreign investors’ confidence.

The fiscal crisis, set off by Asia’s economic collapse and plunging world oil prices, has left Russia with a mountain of short-term debt it must repay at staggering interest rates as high as 150%. Many worried investors have already pulled out, sending stock prices to a two-year low and forcing the Central Bank to spend $10 billion since last year to buy up large amounts of the national currency, the ruble, and prevent its devaluation.

The IMF, which originally offered Russia a loan of $5 billion to $6 billion, is now considering a bailout of up to $12.5 billion: $11 billion from the fund itself and as much as $1.5 billion from the World Bank, said one source familiar with the negotiations. Officials regard such a package as large enough to halt the flight of investors from Russia and, perhaps, bring some of them back.

While the United States and other industrial powers have encouraged the IMF to help Russia, the international lending agency has been unwilling to make the loan unless the government takes serious steps to change the way it does business, including slashing its bloated budget and improving its collection of taxes.

The opposition-dominated Duma, Russia’s lower house of parliament, is scheduled later this week to consider a package of 20 bills to cut spending, raise taxes and satisfy the IMF.

But the Duma approval is far from assured, and President Boris N. Yeltsin earlier issued a veiled threat to dissolve the house if it does not pass the measures quickly.

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Times staff writer Art Pine in Washington contributed to this story.