The Russian government said Tuesday a new loan from the International Monetary Fund would calm the country's rattled markets and allow the government to introduce a series of fi-nan-cial reforms.
"The aid was given before the crisis entered its deepest phase, as a preventative action," Sergei Vasilyev, the government's deputy chief of staff, said of the IMF's decision Monday to grant $11.2 billion in loans to Russia.The move is expected to pave the way for additional loans from the World Bank and the Japanese government, which, together with the IMF, will total $17 billion this year and next.
Russia's markets, which were in a tailspin for months, have been reviving since the loan package was first announced last week. The stock market has been recovering, the ruble is steady and yields on government treasury bills are coming down after soaring in recent weeks.
The loans should give the government some breathing space and stave off the current crisis but do not amount to a solution for entrenched problems such as the government's budget deficit and its inability to collect taxes.
"This loan isn't a cure-all, it simply wins us time for deep economic changes and structural reforms," Vasilyev said at a news conference.
The IMF will send Russia $4.8 billion as a first installment of the loan. The fund had been planning to hand over $5.6 billion but scaled it back because the Russian parliament failed to approve several parts of the government's austerity plan.
In Washington meanwhile, House Majority Leader Dick Armey predicted Congress will slash and put conditions on the Clinton administration's long-delayed request for $18 billion for the International Monetary Fund.
"I've sat back and I've reflected on it and, frankly, I don't believe that will be the outcome," Armey said in canceling his prediction last week that Congress would ultimately go along with the full amount requested.