An International Monetary Fund delegation Wednesday began a tough round of talks in Moscow on a $6.4 billion standby loan for Russia that was expected to focus on how much Russia is spending on its war in Chechnya.
The loan is crucial to Russia's economic stabilization plans for 1995, and economists have predicted runaway inflation and a nosedive for the ruble if the aid is not forthcoming.
Government officials insist the costs of the war amount to 4 trillion to 5 trillion rubles ($1 billion to $1.2 billion) and can be contained within present budget allocations, but independent economists have put the cost of the war as high as 15 trillion rubles.
The State Duma, the lower house of parliament, is due to hear the second reading of the draft budget Friday.
Officials involved in the IMF negotiations said the government met a key IMF condition when it lifted oil export quotas earlier this month, liberalizing a key sector of the Russian economy.
Now, "all that's left is to adopt a budget," said Deputy Economics Minister Sergei Vasilyev. Analysts, however, have voiced skepticism about how far the government has, in fact, liberalized oil exports.
The current mission is expected to last at least a week, another official said, noting that just how long the IMF team stays "will depend on how the talks go."
The negotiators are forging a memorandum on economic policy to be signed by the Russian government and Central Bank. The document, outlining Russia's reform plans in detail, would be the basis for the IMF loan.
The government is counting on a total of $12 billion in external financing to help fund around 60 percent of the budget deficit this year, allowing Moscow to do without inflationary Central Bank financing.
The latest draft foresees spending of 231.97 trillion rubles ($61 billion) and income of 160.32 trillion rubles. The projected budget deficit remains 7.7 percent of GDP.
(AP, Reuters, )
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