Strapped IMF isn't likely to rescue Russia Lender of last resort is pinned down in Asia

May 29, 1998|By NEW YORK TIMES NEWS SERVICE

WASHINGTON -- Russia's recent economic history has been a series of flirtations with disaster. It has repeatedly gone to the brink, requiring assistance from the International Monetary Fund.

But if its economy requires large-scale help anytime soon, it is not clear where the assistance might come from.

Pinned down in Asia, the IMF -- the world's lender of last resort -- says it is strapped for cash. The IMF estimates that it has only $10 billion to $15 billion easily available to fight another national meltdown. Congress has declined so far to commit $16 billion more to the IMF, and until it acts, other nations refuse to increase their contributions.

So if Russia's troubles deepen, the IMF's remaining funds could prove insufficient to support the Russian currency and help the country meet its debt payments. After all, Korea needed a bailout package that totaled more than $50 billion from the fund and other sources, and its economy is far healthier and more developed than Russia's.

Clinton administration officials say there are no plans to use U.S. funds to help the Russians, even with the kind of back-up financing they offered to Indonesia and Korea.

Instead, they are offering private advice (Deputy Treasury Secretary Lawrence Summers visited Prime Minister Sergei Kiriyenko recently) and public encouragement designed to calm the markets.

But unlike Washington, the world's currency traders and investors do not dwell on Russia's strategic importance, or its nuclear capabilities. They are interested in hard evidence that the country can pay its debts. And these days, they have a lot of reason for doubt.

The reasons are more than psychological. Among the heaviest investors in Russia were the South Koreans, who lent to the country and began to build factories there, part of their strategy of isolating North Korea from its one-time allies.

Now, with the South Korean stock market at an 11-year low and South Korean manufacturers cutting back around the world, that source has dried up.

Pub Date: 5/29/98

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