{
  "title": "Press Release: IMF Approves Three-Year EFF Credit for the Russian Federation",
  "publication": "IMF News, March 26, 1996",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr9613",
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  "summary": "The IMF approved a credit for the Russian Federation totaling SDR 6,901.0 million (about $10,087 million) under the extended Fund facility (EFF).",
  "publishDate": "1996-03-26",
  "sections": [
    {
      "heading": "Approval and Credit Details",
      "content": "- The IMF approved a credit for the Russian Federation totaling SDR 6,901.0 million (about $10,087 million) under the extended Fund facility (EFF).\n- The credit is for three years and is equivalent to 160 percent of Russia's quota in the IMF.\n- Disbursement profile reflecting expected improvement in external performance:\n  - 65 percent of quota in the first year\n  - 55 percent in the second year\n  - 40 percent in the third year\n- Disbursement frequency:\n  - Monthly until early 1997\n  - Quarterly thereafter\n- Program monitoring:\n  - Quantitative targets monitored monthly initially and, starting in early 1997, on a quarterly basis\n  - IMF Executive Board reviews: monthly during the first year of the EFF and quarterly thereafter"
    },
    {
      "heading": "Background and 1995 Performance",
      "content": "- Primary objective since late 1991: achieve financial stabilization while transforming to a market-based system.\n- Stand-by credit approved in April 1995: SDR 4,313.1 million (about $6,304 million).\n- 1995 program objective: substantial and sustained reduction in inflation via sharply tighter monetary policy and restrictive fiscal policy.\n- Outcomes in 1995:\n  - Inflation fell to low single-digit monthly rates by end-1995\n  - Real GDP remained broadly stable in 1995, at an average level roughly 4 percent below 1994\n  - Current account surplus widened to $4.7 billion from $3.4 billion in 1994\n  - Introduction in July 1995 of an exchange rate corridor generally judged a success\n- Structural progress uneven:\n  - Banking sector restructuring slow\n  - Privatization pace and scale below expectations\n  - Much remained to be done on land reform"
    },
    {
      "heading": "Medium-Term Strategy and the 1996 Program",
      "content": "- Program aims:\n  - Lower inflation further towards a single-digit annual rate\n  - Achieve medium-term viability of the balance of payments\n- GDP and inflation projections:\n  - Real GDP growth envisaged: 2.3 percent in 1996; 5 percent in 1998; sustained at 6 percent a year over the rest of the decade\n  - Period average consumer price increases envisaged: 51.2 percent in 1996; 6.9 percent in 1998; from 190 percent in 1995\n- External sector projections:\n  - After a surplus of 1.2 percent of GDP in 1995, current account expected to swing into deficits of:\n    - 0.4 percent of GDP in 1996\n    - 1.7 percent of GDP in 1998\n  - Coverage by gross foreign exchange reserves of imports of goods and nonfactor services expected to rise:\n    - 2.5 months at end-1996\n    - 2.9 months by end-1998\n- Fiscal strategy:\n  - Reduce overall fiscal deficit (enlarged government) from about 5 percent of GDP in 1995 to:\n    - 4 percent of GDP in 1996\n    - 2 percent of GDP in 1998\n  - Local governments and extra budgetary funds programmed to maintain a balanced position; federal fiscal deficit path set equal to enlarged government\n  - Financing of deficits projected without recourse to direct credit from the Central Bank of Russia (CBR)\n- Revenue and expenditure measures:\n  - Government aims to improve revenue performance by about five percentage points of GDP over the medium-term\n  - Measures to broaden tax base and improve tax administration, including:\n    - Elimination of exemptions (value-added tax, profit tax, excises, import duties)\n    - Selective increases in tax rates, concentrated in the energy sector (higher excises on oil, gasoline and electricity)\n    - Efforts to capture the rapidly growing private sector and reduce tax delinquencies\n  - Expenditure control:\n    - Strict observance of outlay limits under the 1996 budget law\n    - Spending initiatives either covered by 1996 appropriations or handled by reallocating expenditures within overall ceiling\n- Monetary and exchange rate assumptions:\n  - Targeted reduction in monthly inflation to around 1 percent by end-1996 requires continued restraint in credit policy\n  - Pace of overall credit expansion set to decelerate significantly\n  - Nominal interest rates expected to decline rapidly with lower inflation; real interest rates expected to remain relatively high until well into 1996\n  - Program assumes continuation of the present exchange rate band until end of June 1996 and a broadly stable nominal exchange rate for the ruble thereafter"
    },
    {
      "heading": "Structural Reforms",
      "content": "- Trade:\n  - Complete liberalization of the export regime and reduce weighted average import duty rate\n  - Priority assigned to accession to the World Trade Organization (WTO)\n- Banking and financial sector:\n  - Address liquidity and solvency issues\n  - Introduce new instruments for bank liquidity management\n  - Improve payments system\n  - Strengthen supervisory capacity of the CBR and prudential regulation\n- Privatization:\n  - Speed up privatization while ensuring cash privatization is fair and transparent\n  - Maintain opportunities for foreign investor participation\n- Agriculture:\n  - Address uncertainties about private ownership and inefficient procurement practices\n  - Better targeting of budgetary transfers to the agricultural sector\n- Urban land, real estate, and securities markets:\n  - Major initiatives to establish legal framework for full private ownership and use of land as collateral\n  - Develop effective legal framework for securities transactions, liquidation and reorganization of insolvent enterprises, and protection of outside investors\n  - Strengthen independence and enforcement power of the Securities Commission\n- External obligations:\n  - Government intends to accept by the end of the year the obligations of Article VIII, Sections 2, 3, and 4, of the IMF's Articles of Agreement"
    },
    {
      "heading": "Addressing Social Needs",
      "content": "- Measures to protect vulnerable groups during transition and ensure growth reduces poverty\n- Rationalization of subsidies to create room for improving the social safety net\n- Specific measures:\n  - Increase minimum pension payments along with reform of retirement-age provisions\n  - Increase minimum unemployment benefits and eliminate enterprise employment subsidy schemes"
    },
    {
      "heading": "The Challenge Ahead and External Support",
      "content": "- Program described as highly ambitious and requiring bold efforts by the Russian Government\n- IMF support through the EFF expected to be followed by comprehensive external debt rescheduling to avoid a cash-flow problem from bunching of debt service obligations between 1996 and 2000\n- Russia's IMF membership and financial position:\n  - Russia joined the IMF on June 1, 1992\n  - Russia's quota is SDR 4,313.1 million (about $6,304 million)\n  - Russia's outstanding financial obligations to the IMF currently total SDR 7,099 million (about $10, 376 million)"
    },
    {
      "heading": "Russia: Selected Economic Indicators (as presented)",
      "content": "- Real GDP (percent change):\n  - 1993: -12.0\n  - 1994: -15.0\n  - 1995: -4.0\n  - 1996: 2.3\n  - 1997: 3.5\n  - 1998: 5.1\n- Consumer prices (period average):\n  - 1993: 896\n  - 1994: 302\n  - 1995: 190\n  - 1996: 51.2\n  - 1997: 13.3\n  - 1998: 6.9\n- Enlarged government fiscal account balance (deficit –) (percent of GDP):\n  - 1993: -7.6\n  - 1994: -10.1\n  - 1995: -4.9\n  - 1996: -3.0\n  - 1997: -2.0\n- External current account balance (deficit –) (percent of GDP):\n  - 1993: 1.6\n  - 1994: 1.2\n  - 1995: -0.4\n  - 1996: -1.4\n  - 1997: -1.7\n- Gross reserves (in months of imports of goods and non-factor services):\n  - 1993: —\n  - 1994: 1.1\n  - 1995: 2.6\n  - 1996: 2.5\n  - 1997: 2.8\n  - 1998: 2.9\n\nPress Release No. 96/13, March 26, 1996.\n\n---\n\n\n References\n\n- Russian Federation and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr9613"
    }
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    "Published: March 26, 1996",
    "The IMF approved a credit for the Russian Federation totaling SDR 6,901.0 million (about $10,087 million) under the extended Fund facility (EFF).",
    "The credit is for three years and is equivalent to 160 percent of Russia's quota in the IMF.",
    "Disbursement profile reflecting expected improvement in external performance:",
    "Disbursement frequency:",
    "Program monitoring:",
    "Primary objective since late 1991: achieve financial stabilization while transforming to a market-based system.",
    "Stand-by credit approved in April 1995: SDR 4,313.1 million (about $6,304 million).",
    "1995 program objective: substantial and sustained reduction in inflation via sharply tighter monetary policy and restrictive fiscal policy.",
    "Outcomes in 1995:",
    "Structural progress uneven:",
    "Program aims:",
    "GDP and inflation projections:",
    "External sector projections:",
    "Fiscal strategy:",
    "Revenue and expenditure measures:",
    "Monetary and exchange rate assumptions:",
    "Trade:",
    "Banking and financial sector:",
    "Privatization:",
    "Agriculture:",
    "Urban land, real estate, and securities markets:",
    "External obligations:",
    "Measures to protect vulnerable groups during transition and ensure growth reduces poverty",
    "Rationalization of subsidies to create room for improving the social safety net",
    "Specific measures:",
    "Program described as highly ambitious and requiring bold efforts by the Russian Government",
    "IMF support through the EFF expected to be followed by comprehensive external debt rescheduling to avoid a cash-flow problem from bunching of debt service obligations between 1996 and 2000",
    "Russia's IMF membership and financial position:",
    "Real GDP (percent change):",
    "Consumer prices (period average):",
    "Enlarged government fiscal account balance (deficit –) (percent of GDP):",
    "External current account balance (deficit –) (percent of GDP):",
    "Gross reserves (in months of imports of goods and non-factor services):",
    "[Russian Federation and the IMF](http://www.imf.org/external/country/RUS/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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