|Europe and Central Asia Region
|News Release No. 99/2041/ECA
||Contact: Franz Kaps (202) 473 4726
- NEW FINANCIAL SUPPORT FOR POOREST COUNTRIES
- NEIGHBORING RUSSIA
WASHINGTON, December 11, 1998The World Bank and the International Monetary
Fund (IMF) today hosted a special financing meeting to mobilize additional balance of
payments support for the poorest countries neighboring Russia which have been hardest hit
by the Russian crisis. The meeting was chaired by John Odling-Smee, Director of the
European II Department of the IMF, and Johannes Linn, Vice President of the World
Banks Europe and Central Asia Region, and included participants from the United
States, Japan, Russia, Canada, several European countries, the European Union, and the
Asian Development Bank.
With the recovery of economic growth and the reduction of inflation to single digits
before the Russian crisis, Armenia, Azerbaijan, Georgia, the Kyrgyz Republic, Moldova, and
Tajikistan have been highly successful in macroeconomic stabilization and have made
significant strides in structural reforms in recent years. The meeting participants saw
the financial crisis in Russia as threatening these stabilization gains and endangering
the support for reform policies in the whole region.
In recent months, these countries have committed themselves to tighten financial
policies in order to limit the widening of external imbalances originating from weakening
market prospects, lower capital inflows, and contagion effects of Russias economic
crisis. The meeting was called to support these countries own efforts by raising
funds to cover half of the financing gap caused by the Russian crisis. Participants in the
meeting pledged nearly US$200 million to bolster these countries foreign reserves.
Moreover, some participants indicated that more may be added in coming months.
In their concluding statement, Mr. Odling-Smee and Mr. Linn said, "These
pledges by the participants, combined with the governments policy adjustments, will
address the worsening balance of payments situation resulting from the Russian crisis and
will help to promote stability in financial markets."