IMF news (fwd)

[Robert Weissman <rob@essential.org>]

Clips compiled by the Preamble Center, 4/12/99

ZIMBABWE FIN MIN DENIES BREAK WITH IMF, WORLD BANK

Dow Jones reports the state controlled Herald newspaper reported Monday
that the 
Zimbabwe Finance Ministry, in a bid to reassure markets, has denied it cut
ties 
with the IMF and the World Bank, the main backers of Western-style economic 
reforms since 1992. Finance Minister Herbert Murerwa said a statement
published 
by the Herald's sister paper on Sunday that ties with the two Washington-based 
lending agencies were severed was incorrect. The Guardian (p.7) had reported 
earlier that President Mugabe had announced that his government was severing 
connections with the IMF and the World Bank, a move likely to intensify his 
country's economic troubles. The story said economists then believed that all 
major donors would freeze financial assistance until an IMF agreement is 
reached.

The Financial Times (p.4) noted that the state-owned Sunday Mail (Zimbabwe) 
reported that Industry and Commerce Minister Nathan Shamuyarira said the 
government would have to find other ways to fund programs. The IMF has
withheld 
$53 million in balance-of-payments support to Zimbabwe since August, demanding 
transparency in government policies. The Fund says it is mainly worried about 
threats to seize white-owned farmland for redistribution to black peasants, 
paying only for infrastructure improvements and not for the lands.
Other donors have indicated they would take their cue from the IMF on
whether to 
release additional financial support, seen as crucial to reviving Zimbabwe's 
economy. The Wall Street Journal (p.A17) also reports.

The conflicting reports from two top state officials saw financial markets
open 
cautiously Monday, but there was no immediate impact on trading, dealers said, 
Dow Jones continues. "But it is worrying. This could reflect divisions between 
moderates and hardliners in the government over what to do about the Bretton 
Woods institutions," said one Harare dealer who spoke on condition of
anonymity 
for professional reasons.

FRANCE TO PROPOSE IMF/WORLD BANK DEBT RELIEF FOR BALKANS

France said on Friday it would ask the IMF and the World Bank to set up a 
special economic aid group this month for Balkan countries affected by the 
crisis in Kosovo, Agence France-Presse reports. In a statement, French Finance 
Minister Dominique Strauss-Kahn also said he would ask members of the Paris
Club 
of international creditors to consider granting debt relief to Albania and 
Macedonia, the two countries worst hit by the flood of refugees from Kosovo.

Strauss-Kahn said he would write to IMF Managing Director Michel Camdessus and 
to World Bank President James Wolfensohn suggesting that a special aid
group be 
set up when the two organizations meet in Washington on April 27 and 28. 
Members of the Paris Club would be asked to devise ways of treating the
external 
debt of Albania and Macedonia "to allow them to face up to the brutal and 
unforeseeable shock which followed the crisis. This could for example involve 
suspending some of the repayments due in 1999 and 2000."
Over the long term, adds Le Monde (4/11, p.2), Strauss-Kahn reckons the
economic 
reconstruction of these countries could lead to association with the EU.

The news comes as Reuters reports that the IMF said on Saturday it was
exploring 
ways to provide new assistance to Albania as the tiny Balkan nation
struggles to 
cope with the influx of some 300,000 ethnic Albanian refugees from Kosovo.
In a 
letter to Prime Minister Pandeli Majko, Camdessus pledged his personal 
commitment to providing Albania with the maximum support the IMF can mobilize, 
in cooperation with the World Bank, the EU, and other donors.

Albania agreed a three-year $47 million Enhanced Structural Adjustment
Facility 
(ESAF) credit with the IMF last May, designed to boost growth and cement 
economic reforms, the story notes. Majko has put economic reform and 
privatization at the top of his agenda since coming to power at the head of a 
center-left coalition last October. But the war in neighboring Kosovo
threatens 
to derail his program as foreign investment stalls and exports fall,
pointing to 
a widening of the trade deficit.

The cost of supplying power and water to the camps, as well as transporting 
refugees from collection points in the north to other sites, may also inflate 
the budget deficit, which stood at six percent of gross domestic product in 
1998.

Meanwhile, the president of the former Yugoslav republic of Macedonia said 
yesterday that despite US and EU aid over the influx of Kosovo ethnic Albanian 
refugees, his country needed more help, including debt relief, Reuters says
in a 
separate report. President Kiro Gligorov said the international aid had
enabled 
adequate living conditions to be established for the refugees but that his 
impoverished country remained vulnerable to the Kosovo turmoil.

IMF TO CONSIDER LOAN FOR RUSSIA IN LATE MAY AT EARLIEST

In the wake of the latest visit to Moscow by an IMF mission, the Fund's 
governing body will not consider approval of the Russian Cabinet's program 
before the end of May or early June, Interfax says IMF executive director for 
Russia Alexei Mozhin said on Thursday. "This is the earliest possible time," 
and the date of the meeting will depend on how quickly the Russian Cabinet 
carries out the steps needed by the IMF for it to discuss the extension of a 
loan, Mozhin said.
"The goal is not to have as much as possible, but as little as possible that 
suffices to service the debt," Mozhin added. "The money we propose to
borrow is 
not intended for the financing of current needs, but only to enable us to 
service the debt." For this reason, the Russian budget needs an estimated $4 
billion to $4.5 billion from the IMF, the World Bank, and Japan, he said.
President Boris Yeltsin faces another economic disaster if he cannot win
another 
multi-billion-dollar loan this spring form the IMF, adds the New York Times 
(p.A1), saying that he also faces possible impeachment this week by the 
Communist-controlled Parliament, which has stationed itself at the head of an 
anti-American charge.

The news comes as ITAR-TASS reports that Russian Prime Minister Yevgeny
Primakov
is scheduled to meet with World Bank President James Wolfensohn tomorrow 
afternoon.

In other news, Interfax says in a separate report that Russia, in an effort to 
draw more foreign investment, will take another 2,391 shares in MIGA. An order 
signed by Primakov instructs the Ministry of Finance to include $228,382 in
the 
2000 and 2001 budgets to increase Russia's share in MIGA capital. MIGA has 
provided $175 million in guarantees for Russia (the country's quota is $225 
million), which helped draw nearly $800 million in foreign investment, the
story 
notes.

Also, the company that operates 29 nuclear power plants in Russia,. long
unable 
to collect cash for its electricity sales, is looking for investments from 
Western governments or companies interested in sahring control of the
reactors, 
the New York Times (pA6) reports. The director general of the Russian Electric 
Power Company, is currently touring the US with a group of Russian nuclear 
officials.

Further, columnist Robert D. Novak writes in the Washington Post (p.A23) 
that secret negotiations in Moscow last week to funnel more IMF billions into 
Russia were encouraged by the Clinton administration's managers of the NATO 
strike against Yugoslavia and that connection suggests an elaborate scheme to 
buy the Kremlin's neutrality in the Balkan war. The myth of the IMF's 
independence from the US has been shattered by its funding of Russia to 
influence Balkan policy, Novak adds, and however misguided the policies of the 
IMF professionals, their anger over becoming an instrument of US foreign
policy 
is understandable.