Lawrence Summers, U.S. Treasury undersecretary for international affairs, told a Moscow news conference that he was impressed by how much Russia's private sector had grown and by the increased sophistication of the country's financial markets.
He also gave high marks to Russia's 1995 budget and its oath to reduce inflation to 1 percent per month and end direct Central Bank credits to the government.
"It is clear that economic reforms are at an important crossroads," he said. "It is also clear that the government is charting a course forward."
The tight budget was announced last week in the wake of the ruble's steepest crash ever. Monthly inflation was 7.7 percent in September and is expected to be higher this month in the wake of the ruble's devaluation.
Summers was in Moscow to sign a $900 million debt rescheduling accord with Acting Finance Minister Andrei Vavilov. The bilateral agreement, announced in June, will defer about $900 million in Russian debt payments to the United States this year. Russia will make payments to the United States of about $800 million.
This year's Paris Club agreement allows Russia 10 years to repay $7 billion owed by the former Soviet Union. Overall Russia's total foreign debt is about $83 billion. Of that, about $40 billion is owed to official, external creditors and about $5.4 billion to the United States.
The United States is also talking to the International Monetary Fund about expanding lending to Russia through systemic transition facilities, Summers said. Systemic transition facilities are IMF loans earmarked for former Soviet bloc countries undergoing transformation to market economies.
Summers said that while he was happy with Russia's recent strides forward in monetary stabilization, the country is in dire need of structural reforms to expand its tax base, improve its welfare system and refine its industrial policy.
"We've learned over the years that saying that inflation is only a macroeconomic policy problem is the same as saying that starvation is only a food problem," Summers said. "It is quite naive to think of the task of economic reform as one of economic detail rather than one of structural changes."
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