{ "title": "Press Briefing on Russia - - Stanley Fischer", "publication": "IMF News, July 13, 1998", "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/54/tr980713", "canonical": "https://www.imf.org/en/news/articles/2015/09/28/04/54/tr980713", "overlayPath": "/en/news/articles/2015/09/28/04/54/tr980713/index.md", "summary": "Part 1 of a press briefing on Russia given by Stanley Fischer and IMF Treasurer David Williams. Part 2 is available at www.imf.org/external/np/tr/1998/tr980713a.htm", "publishDate": "1998-07-13", "sections": [ { "heading": "Overview of agreement with Russia", "content": "- Agreement focuses on the 1999 budget and structural measures to promote growth.\n- The 1999 budget is expected to produce a budget deficit of 2.8 percent of GDP, versus an expected 1998 deficit of 5.6 percent and a 1997 budget that was larger than 1998.\n- The Russian Government will submit measures to the Duma on Wednesday and Thursday; the Federation Council meets Friday and Saturday. Measures must be approved by both houses and signed by the President.\n- IMF Board meeting scheduled for next Monday to allow parliamentary consideration and Presidential action.\n- IMF staff emphasized credibility and implementation: agreement includes procedures in the event measures are not accepted by the Duma and Federation Council." }, { "heading": "IMF financing package and tranches", "content": "- IMF agreed to provide an extra $11.2 billion to Russia in 1998.\n- $5.6 billion of that $11.2 billion would be recommended for disbursal upon Board approval next Monday, conditional on pre-conditions being met.\n - Of the $5.6 billion, half would be an augmentation of the EFF and half would come from the CCFF; $2.8 billion of the $5.6 billion comes out of the CCFF.\n- Two additional tranches in 1998 would complete the total additional $11.2 billion for 1998.\n- Two tranches of $670 million each are waiting to be disbursed when conditions are met on schedule in the remainder of 1998.\n- If Russia stays on track, it will be eligible for another $12.5 billion of financing from the IMF in 1998 (i.e., $11.2 billion extra plus the two $670 million tranches).\n- Russians requested replacement of the current EFF by a new 3-year EFF starting beginning of 1999, with envisaged disbursements on roughly the same scale as the present EFF, about $2.6 billion a year.\n - Under that envisaged path, by the end of 1999 the Fund would have disbursed about $15.1 billion to Russia.\n- Timing of expected remainder of 1998 disbursements: remaining $5.6 billion expected in two tranches (Mr. Fischer indicated August and another tranche coinciding with other releases)." }, { "heading": "World Bank and bilateral support amounts", "content": "- World Bank: $1.25 billion for the remainder of 1998; plans another $3 billion in 1999; plus pipeline funds taking total to $4.25 billion, and \"money still coming due\" bringing it up to $6 billion due from the World Bank between now and the end of 1999.\n- Japan: agreed to provide $1.5 billion in balance of payments support cofinancing the World Bank.\n- Aggregation cited: $21.1 billion through end-1999 from IMF + World Bank; with Japan's $1.5 billion cofinancing, reaching the Russian figure of $22.6 billion." }, { "heading": "GKO conversion (debt restructuring) details", "content": "- Russian Government to announce a plan (voluntary) to convert GKOs maturing through June 1999 into longer-term, dollar-denominated liabilities at 7 years and 20 years.\n- Purpose: make rollover attractive, relieve immediate market pressure, reduce interest bill on replaced instruments, and likely reduce interest on existing GKOs.\n- Russians agreed there will be no further borrowing at less than one-year maturity under the program.\n- Details of the debt offer to be announced the following day; a road show planned later in the week.\n- IMF did not require hedging of new dollar-denominated instruments (answer to question: \"Did you require them to hedge their currency exposure?\" — \"No.\")." }, { "heading": "IMF liquidity position and use of GAB", "content": "- IMF developing need to draw on GAB due to significant call on resources for Russia.\n- Of the $11.2 billion extra for Russia, IMF intention is to request that $8.4 billion be provided from the GAB.\n- Current stated net usable resources and liquidity (as of the briefing):\n - Net usable resources: SDR 23.5 billion (stated as \"say, $31 billion\").\n - Liquid liabilities: SDR 52.6 billion.\n - Liquidity ratio: 45.7 (as of today).\n- With the announced Russian program and expected new commitments for the remainder of the year:\n - Without use of the GAB, liquidity ratio would fall to 19 percent.\n - With GAB use of the amount mentioned (SDR 8.4 billion / $8.4 billion equivalent), liquidity ratio at end-1998 expected to be about 29 percent.\n - Both figures described as \"very low\" and \"an historic low\" apart from a very brief earlier moment.\n- Dollar breakdown provided by Mr. Williams:\n - Without the GAB: expected lendable resources would be $19.8 billion by end of year.\n - With the GAB: expected lendable resources would be $23 billion by end of year.\n - Current usable resources cited as $31 billion (equivalently SDR 23.5 billion).\n- Discussion of lendable resources and comfortable liquidity threshold:\n - At a 30 percent liquidity ratio, IMF would need $17.5 billion; current was cited as 30 (conversion context in Q&A).\n - Lendable resources (difference between current resources and needed at 30 percent) indicated as $12.5 billion in that discussion.\n- Historical GAB invocation:\n - Last U.S. invocation referenced as 1978; other reference to 1976 as the \"real one.\"\n- GAB available amounts referenced:\n - \"There is another 14 we could draw on in the GAB\" and Mr. Williams: \"Ten-point-six billion SDRs, $14 million\" (exact phrasing preserved from transcript)." }, { "heading": "Monitoring, conditionality, and implementation", "content": "- IMF will recommend disbursal next Monday if pre-conditions are met and Board approves.\n- Monitoring to proceed via established mechanisms: mission presence in Moscow, cooperation with central bank, scheduled tranche releases tied to performance.\n- Tranche release timing discussed: September and early December for monitoring cycles; tranches expected to coincide with specified release schedule (August, then when everything is put together).\n- Mr. Fischer: \"Whenever there is a tranche release, yes, every time there is a scheduled tranche release.\"" }, { "heading": "Risks, macro outlook, and banking sector concerns", "content": "- Devaluation considerations:\n - IMF view: devaluation does not solve underlying fiscal problem; main focus is budget correction to address recurrent fiscal problem.\n - Devaluation would have adverse consequences for banking system and inflation; precise numbers on exposures were not known.\n - Hedging activity in GKO market reported to have come down because hedges became expensive; IMF indicated uncertainty about precise extent.\n- Banking sector vulnerabilities highlighted as a concern if devaluation occurs and because of potential hedge-related exposures of Russian banks.\n- Fiscal federalism, revenue-sharing, inclusion of previously off-budget funds into budget, and tax code reforms are among structural measures in the package.\n- Macroeconomic outlook:\n - IMF staff forecasts not available at the time of briefing; Mr. Fischer guessed \"modest growth in 1999 under the program\" if successful and if interest rates fall significantly.\n - Mr. Fischer deferred giving formal forecasts until staff documents become available in following days." }, { "heading": "Other country programs and operational constraints", "content": "- Pakistan:\n - Tranche consideration for Pakistan was on Board schedule; sanctions following Pakistan's nuclear test complicate support as G-7 sanctions affect voting prospects.\n - IMF stated Pakistan difficulties are related to sanctions, not IMF financial constraints.\n- Indonesia:\n - Board meeting scheduled for Wednesday on Indonesia for a $1 billion tranche under its program.\n - Indonesian LOI had been published.\n - IMF sees progress on funding gap resolution for Indonesia, sufficient to go to the Board though the issue is \"not entirely closed.\"\n- Broader operational constraints:\n - IMF entering a region of grave financing difficulty; without additional resources or shareholder action, capacity to respond to major crises would be constrained.\n - If quota increases were approved by shareholders, the total would be another $90 billion, with $67 billion usable (Mr. Williams gave figure of \"Ninety-two billion, of which $67 billion will be usable\" — both figures cited in the transcript).\n - Quota increase requires 85 percent of voting shares; U.S. approval is pivotal.\n - IMF stressed institutional differences versus World Bank: Fund operates on member resources and members' rights to reserve tranches; GAB is the borrowing backup." }, { "heading": "Policy messages and recommendations (implicit in briefing)", "content": "- Fiscal consolidation and credible implementation are necessary to remedy Russia's recurrent budget problem.\n- Structural measures (fiscal federalism, tax code reforms, bringing off-budget funds into the budget) are central to program credibility.\n- International financing (IMF, World Bank, bilateral cofinancing) should be coordinated and contingent on credible program implementation.\n- Monitoring and tranche-based conditionality remain primary tools to ensure compliance and program progress.\n\nSource: Press Briefing on Russia — Stanley Fischer, July 13, 1998.\n\n---\n\n\n References\n\n- PRESS CENTER\n- www.imf.org/external/np/tr/1998/tr980713a.htm\n- [[Briefing Continued by Mr. Williams]](https://www.imf.org/external/np/tr/1998/TR980713A.HTM)\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/54/tr980713" } ], "bullets": [ "[Markdown version](/en/news/articles/2015/09/28/04/54/tr980713/index.md)", "[Structured JSON version](/en/news/articles/2015/09/28/04/54/tr980713/index.json)", "[Bundle manifest](/en/news/articles/2015/09/28/04/54/tr980713/bundle-manifest.json)", "Published: July 13, 1998", "Agreement focuses on the 1999 budget and structural measures to promote growth.", "The 1999 budget is expected to produce a budget deficit of 2.8 percent of GDP, versus an expected 1998 deficit of 5.6 percent and a 1997 budget that was larger than 1998.", "The Russian Government will submit measures to the Duma on Wednesday and Thursday; the Federation Council meets Friday and Saturday. Measures must be approved by both houses and signed by the President.", "IMF Board meeting scheduled for next Monday to allow parliamentary consideration and Presidential action.", "IMF staff emphasized credibility and implementation: agreement includes procedures in the event measures are not accepted by the Duma and Federation Council.", "IMF agreed to provide an extra $11.2 billion to Russia in 1998.", "$5.6 billion of that $11.2 billion would be recommended for disbursal upon Board approval next Monday, conditional on pre-conditions being met.", "Two additional tranches in 1998 would complete the total additional $11.2 billion for 1998.", "Two tranches of $670 million each are waiting to be disbursed when conditions are met on schedule in the remainder of 1998.", "If Russia stays on track, it will be eligible for another $12.5 billion of financing from the IMF in 1998 (i.e., $11.2 billion extra plus the two $670 million tranches).", "Russians requested replacement of the current EFF by a new 3-year EFF starting beginning of 1999, with envisaged disbursements on roughly the same scale as the present EFF, about $2.6 billion a year.", "Timing of expected remainder of 1998 disbursements: remaining $5.6 billion expected in two tranches (Mr. Fischer indicated August and another tranche coinciding with other releases).", "World Bank: $1.25 billion for the remainder of 1998; plans another $3 billion in 1999; plus pipeline funds taking total to $4.25 billion, and \"money still coming due\" bringing it up to $6 billion due from the World Bank between now and the end of 1999.", "Japan: agreed to provide $1.5 billion in balance of payments support cofinancing the World Bank.", "Aggregation cited: $21.1 billion through end-1999 from IMF + World Bank; with Japan's $1.5 billion cofinancing, reaching the Russian figure of $22.6 billion.", "Russian Government to announce a plan (voluntary) to convert GKOs maturing through June 1999 into longer-term, dollar-denominated liabilities at 7 years and 20 years.", "Purpose: make rollover attractive, relieve immediate market pressure, reduce interest bill on replaced instruments, and likely reduce interest on existing GKOs.", "Russians agreed there will be no further borrowing at less than one-year maturity under the program.", "Details of the debt offer to be announced the following day; a road show planned later in the week.", "IMF did not require hedging of new dollar-denominated instruments (answer to question: \"Did you require them to hedge their currency exposure?\" — \"No.\").", "IMF developing need to draw on GAB due to significant call on resources for Russia.", "Of the $11.2 billion extra for Russia, IMF intention is to request that $8.4 billion be provided from the GAB.", "Current stated net usable resources and liquidity (as of the briefing):", "With the announced Russian program and expected new commitments for the remainder of the year:", "Dollar breakdown provided by Mr. Williams:", "Discussion of lendable resources and comfortable liquidity threshold:", "Historical GAB invocation:", "GAB available amounts referenced:", "IMF will recommend disbursal next Monday if pre-conditions are met and Board approves.", "Monitoring to proceed via established mechanisms: mission presence in Moscow, cooperation with central bank, scheduled tranche releases tied to performance.", "Tranche release timing discussed: September and early December for monitoring cycles; tranches expected to coincide with specified release schedule (August, then when everything is put together).", "Mr. Fischer: \"Whenever there is a tranche release, yes, every time there is a scheduled tranche release.\"", "Devaluation considerations:", "Banking sector vulnerabilities highlighted as a concern if devaluation occurs and because of potential hedge-related exposures of Russian banks.", "Fiscal federalism, revenue-sharing, inclusion of previously off-budget funds into budget, and tax code reforms are among structural measures in the package.", "Macroeconomic outlook:", "Pakistan:", "Indonesia:", "Broader operational constraints:", "Fiscal consolidation and credible implementation are necessary to remedy Russia's recurrent budget problem.", "Structural measures (fiscal federalism, tax code reforms, bringing off-budget funds into the budget) are central to program credibility.", "International financing (IMF, World Bank, bilateral cofinancing) should be coordinated and contingent on credible program implementation.", "Monitoring and tranche-based conditionality remain primary tools to ensure compliance and program progress.", "[PRESS CENTER](http://presscenter.imf.org/)", "[www.imf.org/external/np/tr/1998/tr980713a.htm](https://www.imf.org/external/np/tr/1998/tr980713a.HTM)", "[[Briefing Continued by Mr. Williams]](https://www.imf.org/external/np/tr/1998/TR980713A.HTM)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2015/09/28/04/54/tr980713/index.md", "json": "/en/news/articles/2015/09/28/04/54/tr980713/index.json", "bundleManifest": "/en/news/articles/2015/09/28/04/54/tr980713/bundle-manifest.json" }, "generatedAtUtc": "2026-09-27T13:32:30.885Z" }