Moscow to IMF: Check, Please

Russia tries to impress an aloof International Monetary Fund as its economic crisis worsens

By Tony Karon Friday, July 03, 1998
    • MOSCOW: A high-profile tax raid by Russia on its leading tax defaulter, Gazprom, was calculated to impress the IMF, says TIME correspondent Andrew Meier. But even if it accomplishes that, the international body is unlikely to cut the big check Russia so desperately needs. "The IMF seems bent on playing high-stakes brinkmanship," says Meier, "extorting vows to slash the budget and strip the fat before it will agree to bail Russia out." But Russia's condition is deteriorating rapidly.

    Unpaid miners were planning to return to their barricades along key rail lines Friday and more state employees were poised to walk out. "IMF officials believe the crisis will force Moscow to undertake reforms which would leave it better off in the long run -- but only if Russia can make it that long," says Meier. Tax reform has persuaded the IMF to release a delayed $670 million installment of a long-term loan, but Russia wants a $10 billion to $15 billion rescue plan. "The bailout has become the key to recovery," says Meier. "It's a psychological thing -- investors are waiting for the bailout to restore their confidence." And the miners out stopping trains want their wages.