Wednesday May 27, 11:24 PM
IMF says Russia to buy fund's first-ever bonds
By Veronica Smith
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WASHINGTON (AFP) - The International Monetary Fund said Wednesday that Russia intends to buy up to 10 billion dollars in the multilateral institution's first-ever bonds.
IMF managing director Dominique Strauss-Kahn hailed the plan to invest in the 185-nation body, which is struggling to provide financing to countries in trouble amid the global financial and economic crisis.
"I have received a communication from Prime Minister (Vladimir) Putin informing me of the Russian Federation's intention," he said.
"The Russian authorities have signaled strong support for the IMF and its mandate in line with the commitment by the G20 leaders in London," said Strauss-Kahn.
"I am very gratified by the Russian Federation?s intention to invest in IMF paper. It is our hope that other fund members will join this effort," he added.
The IMF chief said he had instructed his staff to present the necessary documentation to the fund?s executive board "to allow issuance of notes as soon as possible."
Russian Finance Minister Alexei Kudrin earlier said that the country's central bank will buy the bonds.
"We are currently discussing in the government the possibility of making a decision in the nearest future to invest our funds in up to 10 billion dollars of IMF bonds," Kudrin told President Dmitry Medvedev in televised comments.
The IMF has been working to issue its very first bonds and major developing economies such as Brazil, Russia, India and China -- known collectively as the BRIC countries -- were seen as potential buyers.
"I hope this money will serve the purpose of overcoming the repercussions of the global financial crisis and will support states -- including those that are close to us -- that have suffered most from the influence of the global financial crisis," Medvedev told Kudrin.
At a Group of 20 summit in London on April 2, leaders of 20 major developed and developing economies agreed to commit 1.1 trillion dollars to the IMF and other global bodies to help struggling economies.
The once-buoyant Russian economy has been hit hard by a slump in the price of oil, its main export, and the government is planning to borrow seven billion dollars abroad next year.
Despite Russia's financial troubles, the IMF bond purchase would be in line with obligations Russia took upon itself at the G20 summit, Medvedev told Kudrin at the meeting.
The IMF's resources have been under increasing strain as it extends financing to troubled economies and implements new financing instruments aimed at streamlining crucial lending in the worst global crisis since the 1930s Great Depression.
Among those is a no-strings-attached flexible credit line, launched in March for countries with strong economic policies and track records.
Three countries to date have signed up for the credit line. Mexico was first, obtaining a 47-billion-dollar line of credit, followed by Poland, at 20.58 billion dollars, and Colombia, at 10.5 billion.
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