International Monetary Fund. External Relations Dept.
In a press release issued on July 28, the IMF announced it has approved a 17-month Stand-By credit for Russia equivalent to SDR 3.3 billion (about $4.5 billion) to support the government’s 1999–2000 economic program. There will be seven equal disbursements of SDR 471.4 million (about $640 million), with the first installment to be released immediately. Subsequent installments will depend on quarterly reviews being completed and performance criteria and structural benchmarks beingmet. At the conclusion of the IMF Executive Board meeting, IMF First Deputy Managing Director Stanley Fischer made the following statement.
This paper describes developments in multilateral official debt renegotiations over the 18 months through December 1987. The most important new departure in multilateral official debt renegotiations was the adaptation of policies by Paris Club creditors in response to the protracted problems of the poorest and most heavily indebted countries at the same time that other initiatives were launched for low-income countries, including the proposal for enhancement of the IMF’s structural adjustment facility. Official creditors have generally preserved concessional interest rates in the restructuring of official development assistance (ODA) loans; moreover, for the poorest debtors, some creditors have converted such loans into grants. The question of interest concessions on other categories of debts rescheduled by the Paris Club was raised, inter alia, by the Venice summit but no consensus exists among creditors for changing the current practice. By regularly excluding short-term debt from reschedulings, debtors and creditors have also frequently succeeded in protecting the flow of short-term trade financing, which is often vital to the financing of an IMF-supported program.
Stock and bond issues and capital markets in less developed countries (LDCs) have recently received increasing attention from policymakers, and this preliminary study provides a cross-country survey of the actual experience of LDCs in this respect. Capital markets in LDCs are markedly underdeveloped, reflecting a combination of historical circumstances, current level of economic and financial development, and government policy—including inflation and low interest rates on government debt. Through its regulatory powers, the government can do much to reduce uncertainty (and, hence, risk). Supervising capital markets has several dimensions: preventing fraud; improving information; reducing transactions costs; and developing capital market techniques and institutions. Information on the Brazilian experience includes the fact that a strong, self-sustained capital market has not yet been established, despite the gains made. Tax incentives do provide a way of promoting capital market development, but the benefits of initial development must be judged in terms of the cost of tax receipts forgone.
This paper shows how to utilize the data on trade structure to achieve the best possible estimates of the effects of price changes, given any reasonable array of elasticity estimates. The credibility of estimates of price effects depends on thorough and systematic use of these data, as well as on the statistical credentials of the elasticities assumed. The observations show that the impact of a given price change on a country's exports will be greater, the more that country's exports are concentrated in markets in which substitution elasticities are high, and vice versa, but for most countries strong correlations of this kind are not probable. The general conclusion to be drawn from the paper would seem to be that the information implicit in the base-period matrix is not enough to yield results in which a high degree of confidence can be placed. It remains essential to employ substitution elasticities that are supported by the historical record. Nevertheless, the role of trade structure is vitally important.