IMF: Russian Aid Package Abandoned (fwd)

[Robert Weissman <rob@essential.org>]

IMF: Russian Aid Package Abandoned

          Filed at 2:41 p.m. EST

          By The Associated Press

          MOSCOW (AP) -- The International Monetary Fund has scrapped a
          massive aid program to help Russia dig itself out of its economic 
crisis -- and there are no promises the two sides will be able to draw up a 
new package, an IMF official said Thursday. 

          ``It's still early to say whether there will be such a new, wider 
credit from the IMF,'' the fund's representative in Moscow, Martin Gilman, 
was quoted by the Interfax news agency as saying. 

          The IMF designed a $22.6 billion bailout package when Russia's 
markets were tottering last summer. But it froze the package after Russia 
effectively defaulted on several debts and devalued the ruble in August. 
Since then, the currency has continued to tumble and inflation has risen 
sharply. 

          Now the package has been basically abandoned, Gilman said, and a 
new program needs to be discussed when a team of IMF officials arrives Jan.
20. 

          Meanwhile, First Deputy Prime Minister Yuri Maslyukov arrived in
Washington on Thursday for talks with IMF chief Michel Camdessus. 
Russia has been seeking additional money to help pay off mounting debts
-- mostly obligations to foreign creditors, but also staggering amounts of
unpaid wages, which totaled $816 million on Jan. 1, First Deputy Finance
Minister Viktor Khristenko said Thursday. 

          The IMF wants President Boris Yeltsin's government to implement an
effective recovery program before it sends more cash. 

          ``Unfortunately, we did not reach agreement before the end of the 
year, so it is now important to reach it rapidly,'' Gilman said. 

          The Russian government has been unable to borrow money on
international markets since August. Yet the government is hoping for more
than $5.2 billion in loans this year to cover a planned deficit from its
bare-bones 1999 budget. 

          The first deputy parliament speaker, Vladimir Ryzhkov, said 
Thursday that Brazil's economic turmoil, coming on top of crises in Asia and 
Russia, could prompt the IMF to review its strategies for emerging markets. 

          ``It is obvious that the financial methods once offered by the IMF 
have proved unfeasible and should be revised,'' Ryzhkov said, Interfax
reported. 

          Meanwhile, Russia's huge gas monopoly Gazprom posted a loss of 
more than $2 billion for 1998, a company official said Thursday. 

          Gazprom is by far Russia's largest company, and its poor 
performance reflects the country's sharp economic decline. Gazprom has often
complained that many of its customers are not paying their bills. 

          The company had posted a net profit in 1997 of $1.8 billion, by 
the current exchange rate from rubles. 

          Also Thursday, Prime Minister Yevgeny Primakov said the government
would seek to regulate the price of medicine. Russia relies heavily on
imported drugs, and prices have skyrocketed since the ruble began
crashing last summer.