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IMF head says Russia needs no loan, urges reforms
By Andrius Vilkancas

MOSCOW, Oct 10 (Reuters) - The head of the International Monetary Fund
(IMF) said on Wednesday the lender believed Russia could live without
financial support for the next few years but it was ready to step in if
needed.

IMF Managing Director Horst Koehler was also quoted by Russia's Itar-Tass
news agency as urging Moscow to continue its reforms, with which the Fund
was so far satisfied.

"The economic development of Russia has gone favourably recently and there
are practically no disagreements in the policies pursued by the government
and the ones that should be carried on from our point of view," Koehler said.

Koehler spoke as he began his first visit to Russia since taking up his
present job. He will meet President Vladimir Putin, Prime Minister Mikhail
Kasyanov and other top officials during a three-day visit.

He said reform of agriculture, public administration and the electricity
and gas sectors were priorities now.

"The biggest threat (to Russia) is if the reform process slows down and
starts stagnating. That would immediately deepen the macroeconomic
difficulties," Koehler said.

Russia's situation is much healthier than when the previous head of the
IMF, Michel Camdessus, visited Russia in June 1999 as since then Putin has
launched a series of ambitious reforms to lead its economy to record growth
of 8.3 percent last year.

NO NEED FOR LOANS

"The current situation in Russia is radically different from that before
the crisis," Koehler said, referring to Russia's 1998 financial crisis,
which led to a de facto rouble devaluation.

He said improving domestic demand was now fuelling the economy after it got
a competitive boost from the devaluation and from a rise in the price of
oil, one of its key exports.

Koehler also said that if Russia's government keeps spending and tax
revenue collection under control, the current decline in world oil prices
should not undermine economic growth.

"Talking about prospects up to 2003 and later, we continue to believe that
if Russia continues a prudent policy there will be no need to enter a
programme with the Fund," Koehler said.

Russia, once the biggest borrower from the Fund, has said it does not need
a lending programme at present.

 
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