IMF planning special aid to ex-Soviet bloc nations Loan standards would be looser

April 21, 1993|By New York Times News Service

WASHINGTON -- To help the former Soviet bloc's transition to a market economy, the International Monetary Fund unveiled a program yesterday to provide billions of dollars in loans to Russia and more than 20 other countries under less stringent conditions than those governing the typical IMF loans.

Michel Camdessus, the fund's managing director, said that the program would provide $4 billion to $6 billion in loans over the next 18 months to help former Soviet bloc nations buy imported goods, ranging from food to spare parts needed to modernize industry.

Mr. Camdessus said at a news conference that Russia would qualify for about $3 billion of this money and that he hoped it could begin receiving some in a month or two.

This $3 billion was counted as part of the $28 billion Russian aid package that the Group of 7 industrial nations announced last week in Tokyo.

The monetary fund is not planning to lend the money without any strings attached, Mr. Camdessus said, adding that Russia would have to take some initial steps to bring its inflation rate, now 25 percent a month, under control.

Yet he made clear that to receive the money, Russia would not have to commit itself to meeting specific targets in cutting inflation and its budget deficit. These are among the strict conditions the fund usually demands before lending money.

Mr. Camdessus said that the fund would lend Russia up to $30 billion over the next four or five years to help its conversion to a market economy.

He said the new program, known as the "Systemic Transformation Facility," was being set up to help Russia, Ukraine, Belarus, and other former socialist countries that are hurt by the rapidly rising cost of exports. Many of their trading LTC partners are demanding hard currency, such as dollars, rather than nonconvertible rubles in payment for their exports.

He said that several Eastern European nations, including Bulgaria, Hungary and Poland, might qualify for loans under the program, as might several Asian countries, including Laos, Cambodia and Mongolia.

The loans would be on easy terms, with repayment within 10 years and only interest payments required for 4 1/2 years. The interest rate would be less than 6 percent.

Mr. Camdessus said that he would like the fund's 175 member nations to agree to create more than $30 billion of the fund's own currency, known as special drawing rights, that could be used to help end the global economic slowdown and provide aid for developing nations. In recent years, the United States, Germany and several other industrial nations have blocked this idea.

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