Reform must be fast, warns IMF

Economic crisis: Russians queue to buy US dollars while opposition politicians warn of the nation going bankrupt

THE AMERICAN administration and the International Monetary Fund urged Russia to act without delay on economic reforms yesterday to bolster investor confidence after the decision to devalue the rouble.

"It is critically important that the Russian authorities move quickly to take actions to restore confidence," the US Treasury Secretary, Robert Rubin, said.

Stressing that "the United States and the international community have a great stake in successful Russian economic reform", Mr Rubin said it would be vital for the IMF to work with Russian officials to find appropriate ways to support the country's recovery.

Mr Rubin made no mention of whether Washington would be prepared to support further Western aid to Russia.

Michel Camdessus, IMF managing director, said the organisation would immediately examine steps taken by the Russian government to stabilise plunging financial markets. Russia should hold to the policies that had formed the backbone of the IMF rescue efforts, such as stepping up efforts to rake in taxes. The IMF threw Russia a $23bn (pounds 14bn) lifeline only four weeks ago

In Bonn, the German Chancellor, Helmut Kohl, expressed concern over the devaluation, but said Germany thought any negative impact could be mitigated through careful economic policies.

Stock markets in countries such as Germany, with big stakes in the Russian economy, dipped on the news, though the German Dax stock index later recovered.

The German Finance Minister, Theo Waigel, warned that Russia's plan to control capital flows must not jeopardise the trend toward open capital markets. "Under no circumstances must the fundamental liberalisation of capital movement be questioned," he said.