Originally created 07/21/98

Russia pledges tougher tax collection to win new IMF loan

MOSCOW -- Hoping to win a huge new loan from the International Monetary Fund, Russia pledged Monday to improve its tax collections, which at present collect only a fraction of what the government is owed.

The IMF has said it will not approve a new loan unless Russia raises government revenue through a variety of measures, especially improved tax enforcement.

In a joint statement sent to the IMF on Monday, Prime Minister Sergei Kiriyenko and Central Bank Chairman Sergei Dubinin said they had acted to increase revenue and cap the budget deficit, the Interfax news agency said.

The IMF board met Monday in Washington to discuss the loan, which constitutes the largest part of a $17 billion package intended to rescue Russia's foundering economy.

In a sign of confidence in Russia's financial prospects, investors exchanged nearly $6 billion in short-term treasury bills for longer-term bonds Monday.

The exchange, undertaken on IMF advice, was intended to ease Russia's crushing short-term debt burden.

The State Duma, parliament's lower house, recessed Friday for the summer without passing key elements of the government's economic plan that would increase taxes and reduce social welfare payments.

Kiriyenko and President Boris Yeltsin have said they will pass the defeated measures by decree. Two such decrees -- increases in import and land taxes -- were signed over the weekend.

Russia's chief negotiator with the fund, Anatoly Chubais, estimated Russia's chances of gaining approval for the IMF loan at "80 to 20."

The World Bank is also considering new loans for Russia. It will decide in early August whether to release a $1.5 billion loan for economic restructuring, officials said.

The World Bank's decision will be strongly influenced by the IMF's decision, the World Bank's Moscow representative Michael Carter told Interfax.


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