Moscow Communiqué: Russia and IMF Agree to Extend and Augment Financial Support Under EFF Program

• Pages: 49-50

Page 49

The visit has allowed the Russian authorities and the Managing Director to take stock of what has already been accomplished during the first two years under the EFF. They agreed that, notwithstanding substantial achievements in the areas of macroeconomic stabilization and the establishment of market mechanisms and institutions, a number of remaining challenges require decisive action without Page 50 delay. In particular, structural reform notably promoting the principles of good corporate governance should be deepened and the fiscal imbalances addressed. The 1998 program is designed to take into account the recent international financial market turmoil that has led to a sharp deterioration in the economic environment in which the Russian economy has not been entirely spared.

Recognizing that fiscal imbalances have been a source of recent financial market uncertainties, the government has proposed some key amendments to bring the 1998 budget in line with realistic revenue projections. Forceful efforts will continue to be taken to improve revenue performance. At the same time, comprehensive efforts will be made to cut federal government spending; the completion of the new operational treasury system should establish the control necessary to ensure that the budget appropriations can be fully financed without arrears while reducing the deficit further. The EFF program for 1998 is fully consistent with the draft 1998 budget as...