President Clinton said Sunday that the United States will support Russia's efforts to get additional financial aid from the World Bank and the International Monetary Fund to deal with its economic crisis, which has sent stocks in Moscow plunging and the interest rate soaring.
The United States "endorses additional conditional financial support from the international financial institutions, as necessary, to promote stability, structural reforms and growth in Russia," the president said in a statement issued at the White House.
No specific sums of money were mentioned, but Clinton's comment makes it clear that the administration strongly favors a generous reaction by the World Bank and the IMF to Russia's appeals for financial help.
The Clinton administration seems to hope that a strong commitment of U.S. support for the Russian economy will so bolster the confidence of private investors that they will keep their money in Russia--making it unnecessary for the United States to deliver on that commitment.
Russia is suffering from multiple economic problems, including low tax revenue, high government debt, a decline in oil prices that has cut into revenue from export sales and a spillover from the financial crisis in Asia. Stock prices dropped sharply last week, and the government raised the interest rate on treasury bills to a staggering 150% to try to protect the currency, the ruble, against a devaluation.
The administration believes that monetary help for Russia should come from international organizations rather than as direct financial aid from the U.S., officials indicated.
"We're committed to working with the international financial institutions to provide conditioned financial support as necessary, and we are in active dialogue," a senior administration official said Sunday. "It's too early to know amounts or precise methods, which will depend very much on how the situation evolves."
The IMF has already given preliminary approval to the release to Moscow of a suspended $670-million installment on a loan of about $10 billion.
In order to stabilize Russia's economy and balance the budget, the Kremlin has promised to increase efforts to cut government spending and raise tax revenue. The government has had problems collecting taxes owed by the large number of enterprises, once government-owned, that became private businesses after the collapse of communism.