News Brief No. 98/30

News Brief: Camdessus Comments on Russian Actions

August 17, 1998

The Managing Director of the International Monetary Fund (IMF), Michel Camdessus, today made the following statement, released in Moscow, following the actions announced by the Russian government:

"On July 20 the IMF’s Executive Board approved additional financial assistance to Russia of $11.2 billion in support of a strengthening of Russia’s economic program. Implementation of this program has been satisfactory. Despite this, confidence in financial markets has not been reestablished and as a result Russia has continued to lose reserves, and asset prices have fallen sharply. In view of the risks implied by the persistence of these trends, the Russian government has announced a set of measures designed to bolster confidence, including a change in exchange rate policy, restructuring of government debt, and a temporary restriction on capital payments abroad.

"These measures and their potential impact will immediately be analyzed by the staff and management of the IMF, and submitted to the Executive Board. As a preliminary reaction, I am of the view that, in the new context created by these measures, it will be especially important for the Russian authorities to take all necessary steps to strengthen the fiscal position; prompt passage of fiscal measures in the forthcoming session of the Duma will be essential to this end. The authorities should also spare no effort to find a cooperative solution to their debt problems, in a close dialogue with Russia’s creditors. I hope that the government’s economic program will continue to be implemented in full, so that the economic and financial situation will improve and the IMF can be in aposition to disburse the second tranche under the IMF program in September as scheduled.

"More generally, it is important that the international community as a whole, both public and private sectors, show solidarity for Russia at this difficult time," Camdessus said.