RUSSIA'S PROBLEMS COULD BECOME WORLD PROBLEM; IMF RESOURCES REACHING LIMITS (fwd)

[Robert Weissman <rob@essential.org>]

					Reuters Monday June 1, 1998

RUSSIA'S PROBLEMS COULD BECOME WORLD PROBLEM -- SUMMERS

VIENNA -- U.S. Deputy Treasury Secretary Lawrence Summers on Monday said
Russia's current problems could turn into a problem for the whole world. 
	"Russia's problem has the potential to become in turn central
Europe's and the world's," he said in a speech to an international
monetary conference in Vienna. 
	It was critical that the Russian government made good on recent
commitments to ensure that the historic progress made in economic reform
and stabilising the currency in the past four years was not jeopardised,
Summers added.

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Reuters Monday June 1, 1998

IMF RESOURCES REACHING LIMITS AS RUSSIA REELS

	By Adam Entous

WASHINGTON -- The International Monetary Fund is running short of money
because of Asian bailouts and experts fear it could be stretched beyond
its limits if asked to inject funds into Russia to calm panicking markets.
	The IMF, seen as the world's lender of last resort, has warned
that its usable resources would be just $10 billion to $12 billion without
a proposed replenishment, which has stalled in the Republican-controlled
U.S.  Congress.
	The lending agency has already promised to release the next $670
million tranche of a $9.2 billion loan to Russia in June. That comes on
top of multibillion-dollar rescues for three struggling Asian nations last
year.
	But some market experts say the IMF, Western governments and banks
will need to come up with billions of dollars in extra support to help
Moscow cope with the fallout from Asia's economic crisis. Russia could
need $10 billion or more, they say, an amount leaving the IMF no cushion
should the crisis deepen or spread. 
	Morris Goldstein, a senior fellow with the Washington-based
Institute for International Economics, said the IMF should have enough
money on hand to help Moscow because it can tap into a roughly $23 billion
special credit line called the General Arrangements to Borrow (GAB).
	"They can deal with Russia on the financial side if they tap the
GAB,"  said Goldstein, a former IMF staffer. "The problem is what's likely
to be the next crisis. You really are starting to get close to the bottom
of the barrel."
	"The IMF should have reserves to handle Russia," added Greg
Mastel, vice president with the Economic Strategy Institute.
	"But nobody knows when the next crisis will come up and nobody
knows how much it will cost," Mastel said. "We're all exposed."
	President Clinton promised over the weekend to help pull together
additional aid for Russia if needed from the IMF and the World Bank.
	The State Department said Monday that Washington was coordinating
efforts with other Group of Seven top industrial nations. But the
administration said direct support from Washington was unlikely.
	Analysts said the administration's plan could leave the IMF with
little money left to deal with future crises in other emerging markets.
	"There might not be enough left in the IMF cupboard, and that's
dangerous financially," said Willard Workman, the U.S. Chamber of
Commerce's vice president for international affairs.
	White House spokesman Mike McCurry said the administration was
concerned by IMF cash levels, and added that the financial turmoil in
Russia should spur congressional leaders to support new funding for the
lending agency.
	"There is concern that (the funding) needed by the IMF have to be
replenished," McCurry told a news conference. "Working to deal with the
situation in Russia is difficult, and is a reminder, we hope, to the
United States Congress of the importance of replenishing the resources
that the IMF has available."
	Clinton has been trying to convince Congress to provide $18
billion to replenish IMF resources drained by multibillion dollar rescue
deals for Indonesia, South Korea and Thailand.
	The IMF package has stalled in the House of Representatives, where
it faces stiff opposition. Conservatives argue that the IMF, by coming to
the rescue of countries in trouble, has encouraged governments and
international bankers to engage in ever-riskier business.
	It was unclear whether Russia's problems and fears of its spread
would spur Congress to approve IMF funding.
	In a sign the package still faced an uphill battle, U.S. Senate
Majority Leader Trent Lott said on Monday that the lending agency had
"sufficient funds" to help Moscow. 
	The Mississippi Republican also told reporters: "Congress is not
going to approve more taxpayer dollars for IMF without more
transparency... There's a lot of concerns that IMF's policies are quite
often counterproductive."