MOSCOW (AP) — The World Bank leader announced plans Thursday to lend Russia up to $1 billion to help its miners and farmers. Recent miners’ strikes seriously threatened Russia’s economic reforms.
World Bank President James D. Wolfensohn said the outcome of a hotly contested presidential race would not affect the loans.
In other economic developments Thursday, Moscow announced it is taking over the struggling bank Unikombank, a move aimed at averting the worst bank failure since the start of Russian economic reforms. And the government said trends show inflation was being held to a record-low level.
World Bank President James D. Wolfensohn said the bank will lend Russia $530 million to restructure its coal industry, and may lend it another $500 million more for agricultural reform.
Wolfensohn, who briefed reporters after a meeting with President Boris Yeltsin, said the bank is undeterred by the June 16 elections, which are expected to be a close contest between Yeltsin and Communist Party leader Gennady Zyuganov.
“Whatever the government is in Russia, we are going to do what we can to help the Russian people,” Wolfensohn said. “We do not have a specific plan in place in the event of a Communist government. If it happens, we will adjust.”
The Communists have said little about their economic plans if they win the election, despite widespread concern they could try to halt free-market reforms and restore state economic controls.
Wolfensohn said the bank will dole out half of the coal loan in July. The second half will be released in December, but it probably will be linked to the explosive issue of closing money-losing mines. Their closures are certain to face strong resistance from regional authorities.
He said World Bank loans to Russia would top $6.5 billion by the end of the year, making Russia the World Bank’s largest borrower.
Meanwhile, the State Statistics Committee said that if inflation continues at current rates until the end of the year, the annual rate will be about 27 percent, down from 130 percent last year.
Yeltsin has made curbing inflation a priority, but experts have charged that low inflation was unlikely with Yeltsin making generous promises for social reforms during the campaign.
Zyuganov’s economic platform envisages an increase in money supply, which would spur inflation, in a bid to subsidize Russia’s ailing industries.
Unikombank is Russia’s twelfth-largest private commercial bank and by far the biggest yet to run into trouble. The bank has about 60 percent of the regional administration’s money.
Unikombank’s 220 branches and representative offices have been open as usual through the crisis, officials said, but some have run short of cash and been unable to meet withdrawals.
The Central Bank has gradually tightened regulation on Russia’s 2,600 commercial banks, many of which are undercapitalized and suffer from inexperienced management.
According to Moscow newspapers, the stars also seem to be joining global financial centers in backing President Boris Yeltsin’s steamroller re-election campaign.
A constellation of prominent astrologers joined the growing list of pundits, pollsters and politicians predicting victory for the Russian president in the June 16 election.
“Astrologically, this is an excellent year for Yeltsin,” Vladimir Kopylov of the Russian Astrological Society was quoted as saying in an article Thursday in the Moscow Times. “His sun is in the 10th house — the house of power and fame and the highest peak of the horoscope.”
Boris Yeltsin went into the race as an underdog, but he and his team have mustered the considerable powers of incumbency to turn the campaign around.
Most polls now show the president, an Aquarian, with a slight lead over his main challenger, Communist leader Gennady Zyuganov, a Cancer. The two are likely to go head to head in a July 7 runoff.