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Russian aid faces delays
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September 1, 1998: 8:23 p.m. ET
IMF official says progress on reforms must come before funding is sent
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NEW YORK (CNNfn) - The deputy director of the International Monetary Fund said Tuesday Russia must demonstrate it is making budget progress and is committed to banking reform before more money will be released.
Appearing Tuesday on "Moneyline News Hour with Lou Dobbs," IMF Deputy Director Stanley Fischer said Russia must make progress before another $4.3 billion in aid will be sent. The nation was originally expecting to see the money in September.
"We have a team arriving in Moscow at the end of next week that will have to look at the situation. Given what we know now about the changes in the exchange rate, the difficulties in the banking system and possible problems with the budget, it's clear the Russians will have to do quite a lot before that money can be released," Fischer said.
Fischer attributed Russia's market and currency troubles to the country's inability to raise enough revenue to fund government spending.
What Russia has to do now, Fischer said, is recreate a framework for economic policy. He also said some Russian leaders falsely believe the economy can be stabilized in "an unorthodox way."
"That's not really true. You have to have a decent budget, particularly when you can't borrow," he said.
Russia's problems worsened in mid-August when financier George Soros urged monetary authorities to devalue the ruble, which further weakened the currency.
Fischer said Soros' comments didn't make it impossible for Russian authorities to turn around their currency problems, but his comments did shorten the time officials had to act.
"What I said was I thought there was a couple of weeks in which they could turn the situation around if they had taken resolute action. (After Soros' comments were published,) that period of weeks became a matter of days," he said.
Fischer also downplayed criticism from Congress that the IMF has not done enough to reform its own operations.
"We are responsible to member governments and try to engage as much as we can with the legislative branch in each country,'' he said. "As a matter of the way the IMF is set up, it's the administrations we are responsible to. I'm sure there's more we can do, but I'm also sure we do more than our critics realize."
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