Originally created 07/11/98

Yeltsin appeals to IMF for financial bailout

MOSCOW -- President Boris Yeltsin appealed directly to the head of the International Monetary Fund on Friday, pledging to put Russia's fiscal house in order if the fund comes through with a financial bailout.

"The president of Russia emphasized his firm intention to use all his strength to implement" economic reforms, the Kremlin said in a statement.

Yeltsin also spoke to a series of Western leaders on Friday, including President Clinton, beseeching them for support to help Russia out of its crisis.

A senior IMF official was en route to Moscow on Friday night, presumably to put the finishing touches on a bailout agreement that Russian officials have said is all but completed.

Russia is seeking $10 billion to $15 billion in loans from the agency. Any agreement would likely be contingent on passage of the government's new austerity plan in Parliament -- no small hurdle.

Prime Minister Sergei Kiriyenko delivered a blunt and gloomy report to Parliament on Friday, warning that social tensions are rising in Russia and financial markets have "practically ceased to exist."

Since Russia's economy began spiraling downward this year, volume on the stock market has declined from about $110 million a day to as little as $10 million a day.

In his address to the Federation Council, the upper house of parliament, Kiriyenko also said the government's proposed new economic program represented a wholesale change in economic policy: sharp cuts in government spending combined with a more stringent system for collecting taxes.

He said the program would shift the tax burden from producers to consumers, and also allow the government to pump an immediate $33 billion into industry.

Still, the program -- demanded by Western lending agencies including the IMF -- received only a lukewarm response from the legislators, whose support Kiriyenko was seeking.

The Federation Council overwhelmingly passed a resolution that partly praised the government's approach, but sharply criticized important aspects of the plan.

In his telephone conversation with Yeltsin, Clinton indicated that he supported the Russian president's efforts "to wind up these (negotiations) successfully and also to bring the urgency of these matters to the (State) Duma," said White House spokesman Mike McCurry.

In its own statement, the Kremlin said Clinton agreed that Russia's efforts to stabilize its economy "should be met with an adequate response from the International Monetary Fund."

Yeltsin also spoke by telephone with German Chancellor Helmut Kohl, British Prime Minister Tony Blair and French President Jacques Chirac, all of whom voiced support for Russia's anti-crisis economic program, the Kremlin said.

Yeltsin's telephone conversation with IMF chief Michel Camdessus lasted more than a half-hour. Meanwhile, the government's chief negotiator with Western lending agencies, Anatoly Chubais, prepared to meet with an IMF representative who was expected to arrive sometime Friday night.

The Russian economy was just beginning to show signs of growth when it sharply retrenched this year in response to a variety of pressures, including the Asian financial crisis, a drop in world oil prices and growing signs of impatience and unrest among Russia's long-suffering work force.

The past week alone saw striking miners shut down the Trans-Siberian Railway for the second time this year and unpaid defense workers picket in several Russian cities.

"Social tension is growing in society, which naturally is not helpful to stabilization," Kiriyenko said in his speech.

His harshest words Friday came in his assessment of the shrunken financial markets.

"The financial market has practically ceased to exist," Kiriyenko said. "There is, in fact, no financial market in Russia now."

The prime minister -- a former banker -- dug in his heels, however, when asked if the ruble would be devalued. "Never," he said.

Kiriyenko leaves Monday for an official visit to Japan. News reports have said the Japanese government may extend substantial loans to Russia.


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