B. Dialogue

Imf's support for russian reforms

IMF official: In line with the IMF's desire for greater economic stability in the world, and for stronger, more sustained growth we made a decision to support Russia with an Extended Fund Facility (EFF)³ credit amounting to about $10 billion.

Interviewer. Life has proved that⁴ Russia's strategy for adjustment and reform is strong, and Russian authorities are committed to the program. But isn't the program risky?

Off.: All adjustment programs supported by the IMF entail risk, since only countries experiencing balance-of-payments difficulties borrow from the IMF.

Int.: It is obvious the IMF can never eliminate all risks. But have you built any substantial safeguards into the Russian program?⁵

Off.: Certainly. They include the track record established by the authorities in the previous years, broader quarterly reviews, and continuation of monthly monitoring. I feel I must emphasize here that the Russian program is the only IMF-supported program subject to monthly monitoring.

Int.: That's very reasonable, but some observers question the wisdom of negotiating a program that could be derailed by political developments in Russia and changes in the Government.

Off.: In this connection I would like to stress that the IMF does not support individuals. It supports economic programs. As long as the duly constituted authorities continue to fulfil the requirements of the program agreed with the IMF, the IMF will continue to support that program.

Int.: Is Russia receiving exceptionally favourable treatment from the IMF? The size of the loan is large, isn't it?

Off.: Yes, the loan is large in absolute terms, but as a percentage of Russia's quota, the magnitude of the EFF arrangement is fully in line with the IMF's established lending limits.

Int.: Is the program too demanding? Is there a danger that continued macroeconomic adjustment and sweeping structural changes can irreparably undermine domestic support for the reform?

Off.: It's a very important question. The danger exists, and we must guard against it. This could be done by creating an adequate social safety net with enough budgetary resources to support it.

Int.: And beyond this, I think, the government should be encouraged to do all that it can to ensure that the benefits of the reform emerge – and become evident to the Russian people – as soon as possible.

Off.: Right. This should be uppermost on their minds.

Notes

¹ International Monetary Fund – Международный Валютный Фонд (МВФ)

² General Agreement on Tariffs and Trade – Генеральное соглашение о тарифах и торговле (ГАТТ)

Organization for Economic Cooperation and Development – Организация экономического сотрудничества и развития

Bank for International Settlements – Банк международных расчетов

United Nations Conference on Trade and Development Конференция ООН по торговле и развитию (ЮНКТАД)

World Bank Group – группа Мирового банка

³ Extended Fund Facility – система расширенного финансирования

⁴ Life has proved that – Жизнь доказала, что ...

⁵ have you built any safeguards into the Russian program – предусмотрели ли вы гарантии в программе для России