Russian Federation and the IMF
Michel Camdessus, Managing Director of the International Monetary Fund (IMF), reported yesterday to the Executive Board on the status of the economic program of Russia.
Camdessus said today, "We have been examining the progress made by Russia in the implementation of its economic program. Important progress has been made on the macroeconomic side. In particular, program expectations have been exceeded regarding economic growth, the containment of inflation, the fiscal balance, and international reserves.
"On the structural side, there has also been some progress. However, a number of structural benchmarks set for end-September 1999 remain to be met. When these remaining issues have been satisfactorily resolved, I expect to recommend completion of the review to the Executive Board," he said.
The structural benchmarks for end-September 1999 that remain to be completed are items 4, 5, 6, 8, 9 on the attachment, which is based on Table 3 of Russia's Letter of Intent: (http://www.imf.org/external/np/loi/1999/071399.HTM).
Table 3. Russia: Structural Benchmarks
For September 30, 1999
1. Implement a system of pre-approval of all federal contracts, with all obligations lacking such approval will be declared invalid. This pre-approval will rely on a reporting system monitoring the amount of registered contracts against budget limits on an ongoing basis, with all contracts that exceed federal budget spending limits being denied.
2. Verify and restructure all budgetary arrears from previous years.
3. Submit amendments to the Duma on the Law on Banks and Banking to require lending institutions to make annual public disclosure of banks' key financial indicators, such as capital adequacy ratios and provisions against bad assets; income statements to be introduced by December 31, 1999 for fiscal year 1999; to have annual accounts prepared and audited by a qualified firm; and to publish quarterly reports.
*4. Increase cash collection rates for electric power, district heating, and natural gas to 35 percent, and for freight service provided by the railways, increase cash collection rate to 60 percent.
*5. Pass amendments to the Law on Insolvency (Bankruptcy) to eliminate the bias in the law towards reorganization rather than liquidation of enterprises, eliminate court discretion in overruling the creditors' decision to liquidate the debtor enterprise; and provide for the participation of the state in bankruptcy proceedings at all stages where relevant for the protection of the public interest.
*6. Award contracts for the execution of financial management reviews, leading to annual audits, carried out in line with international auditing standards, of the Pension Fund, Social Insurance Fund, Medical Insurance Fund and the Road Fund.
7. Issue a decision requiring Gazprom, RAO UES, the Railways, and Transneft to prepare and publish on a quarterly basis financial accounts consistent with the International Accounting Standards (IAS), commencing with accounts for the first quarter of 2000.
*8. Eliminate the deposit requirement for prepayment of imports.
*9. Submit to the Duma amendments to the Bank Bankruptcy Law, as described in paragraph 45 of the Statement on Economic Policies.
10. Carry out a review of monetary policy instruments available to the CBR, and take additional measures necessary to allow the CBR to achieve the monetary policy objectives.
* Not met as of December 7, 1999.
IMF EXTERNAL RELATIONS DEPARTMENT