Vocabulary list

A. international monetary system международная валютная система

international monetary institutions международные финансовые организации

exaggeration n преувеличение

affect v воздействовать, влиять

channel n канал, путь

transmit v передавать, отправлять, посылать

impact n влияние, воздействие

employment opportunities вакансии

thrive v процветать, преуспевать

weaken v ослаблять, ослабевать

movement in the exchange rate изменение валютного курса

to leave smb worse off ставить кого-л. в более невыгодное положение

imposition of controls введение контроля (ограничений)

capital movements движение капитала

interdependence n взаимозависимость

set of arrangements (зд.) совокупность договоренностей (мер, мероприятий)

national boundaries государственные границы

pattern n структура, характер, паттерн

adjust v регулировать, корректировать

to be governed (by) регулироваться

Articles of Agreement устав

is afflicted with problems (зд.) обременена проблемами

interdependent adj взаимозависимый

discrepancy n расхождение, противоречие

define v определять

reconcile v примирять

conflicting adj противоречивый

balance-of-payments position состояние платежного баланса

to settle accounts урегулировать счета

in broad terms в широком смысле

adjustment n корректировка, исправление

establishment and alteration of exchange rates установление и изменение обменных курсов

payments imbalances неравновесие платежей

B. Dialogue

Imf's support for russian reforms

IMF official: In line with the IMF's desire for greater economic stability in the world, and for stronger, more sustained growth we made a decision to support Russia with an Extended Fund Facility (EFF)³ credit amounting to about $10 billion.

Interviewer. Life has proved that⁴ Russia's strategy for adjustment and reform is strong, and Russian authorities are committed to the program. But isn't the program risky?

Off.: All adjustment programs supported by the IMF entail risk, since only countries experiencing balance-of-payments difficulties borrow from the IMF.

Int.: It is obvious the IMF can never eliminate all risks. But have you built any substantial safeguards into the Russian program?⁵

Off.: Certainly. They include the track record established by the authorities in the previous years, broader quarterly reviews, and continuation of monthly monitoring. I feel I must emphasize here that the Russian program is the only IMF-supported program subject to monthly monitoring.

Int.: That's very reasonable, but some observers question the wisdom of negotiating a program that could be derailed by political developments in Russia and changes in the Government.

Off.: In this connection I would like to stress that the IMF does not support individuals. It supports economic programs. As long as the duly constituted authorities continue to fulfil the requirements of the program agreed with the IMF, the IMF will continue to support that program.

Int.: Is Russia receiving exceptionally favourable treatment from the IMF? The size of the loan is large, isn't it?

Off.: Yes, the loan is large in absolute terms, but as a percentage of Russia's quota, the magnitude of the EFF arrangement is fully in line with the IMF's established lending limits.

Int.: Is the program too demanding? Is there a danger that continued macroeconomic adjustment and sweeping structural changes can irreparably undermine domestic support for the reform?

Off.: It's a very important question. The danger exists, and we must guard against it. This could be done by creating an adequate social safety net with enough budgetary resources to support it.

Int.: And beyond this, I think, the government should be encouraged to do all that it can to ensure that the benefits of the reform emerge – and become evident to the Russian people – as soon as possible.

Off.: Right. This should be uppermost on their minds.

B. in line with в соответствии с

amount (to) v составлять (сумму), достигать, равняться

strategy for adjustment стратегия перестройки

be committed to быть приверженным чему-л.

adjustment program программа перестройки to entail risk повлечь риск

experience v испытывать

track record (зд.) достижения, успехи

monitoring n мониторинг, контроль

question v (зд.) подвергать сомнению

wisdom n (зд.) разумность

derail v (зд.) срывать выполнение (программы)

duly adv должным образом

exceptionally adv исключительно

favourable treatment (зд.) благоприятные условия

in absolute terms в абсолютном выражении

as a percentage (of) в процентном выражении (от)...

quota n квота

magnitude n величина

EFF arrangement соглашение о предоставлении расширенного финансирования

lending limit кредитный лимит, лимит кредитования одного заемщика

degree n степень

imply v подразумевать, означать

irreparably adv непоправимо

undermine v подрывать основы

guard (against) v защищать, стоять на страже

social safety net система социальной защиты

evident adj очевидный, явный

Words you may need:

to be designed быть предназначенным для чего-л.

to enter into force вступать в силу

balanced adj сбалансированный

multilateral system многосторонняя система

in respect of в отношении

to correct maladjustments исправлять диспропорции

resort (to) v прибегать к

structural reforms структурные реформы

voting power голоса в руководящих органах

purchase v покупать

to maintain the balance поддерживать баланс

pool n пул

relieve v облегчать

fluctuation n колебание

par value валютный паритет, номинал

parity n паритет

furnish v (зд.) предоставлять

on the spot на месте

lay down v устанавливать, формулировать

Board of Governors Совет управляющих

powers n полномочия

delegate v делегировать

Board of Executive Directors Совет исполнительных директоров

Words you may need:

shareholder n акционер

relative to относительно

flexibility n гибкость

specifically adv (зд.) конкретно

in relation to что касается

willingness n готовность

to bear risk нести риск

multilateral lenders многосторонние кредиторы

AAA credit rating показатель кредитоспособности ААА

viable adj жизнеспособный

Words you may need:

anniversary n годовщина

reflection n размышление

further evolution эволюция, дальнейшее развитие

surveillance n надзор

General Resources Account счет общих ресурсов

SDR (Special Drawing Rights) специальные права заимствования

stand-by arrangement соглашение о резервных кредитах

compensatory and contingency financing facility система компенсационного финансирования и финансирования непредвиденных расходов

systemic transformation facility механизм финансирования системных преобразований

concessional assistance помощь, предоставляемая на льготных условиях

disburse v оплачивать, платить

structural adjustment facility механизм финансирования структурной перестройки

enhanced structural adjustment facility механизм расширенного финансирования структурной перестройки

mandate n мандат

oversee v наблюдать

oversight n присмотр, надзор

impetus n стимул, толчок

in spite of prep несмотря на

resurgence n возрождение, восстановление

sustainable growth устойчивый рост

Words you may need:

affiliate n филиал

war-devastated areas разоренные войной территории

bond issue выпуск облигаций

complement v дополнять

survey n обследование

International Finance Corporation Международная финансовая корпорация

repayable adj подлежащий погашению (уплате)

grace period льготный период

integrate v интегрировать; (зд.) включать, вовлекать

vest v облекать, наделять властью

The IMF's financial resources are made available to its members under a variety of facilities and policies, depending on the circumstances, especially the nature of the macroeconomic and structural problems to be addressed.

The IMF makes resources available under both its general resources and its concessional financing facilities. Member countries use the general resources of the IMF by making a purchase (drawing) of other members' currencies or SDRs with an equivalent amount of their own currencies. The IMF levies charges on these drawings and requires that members repurchase (repay) their own currencies from the IMF with other members' currencies or SDRs over a specified time. Concessional financing under the structural adjustment and enhanced structural adjustment facilities is made available in the form of loans.

Regular facilities include: Reserve tranche, Credit tranches, Standby Arrangements, Extended Fund Facility. In providing financial support to any member country, the IMF must be assured that the member is pursuing policies that will ameliorate or eliminate its external payments problem. The requirement that members make a commitment to a set of policy measures aimed at correcting economic and financial imbalances within a reasonable period in return for IMF financial support is known as "conditionally". "Conditionally" is designed to ensure that members using IMF resources will be able to repay the IMF in a timely manner.

IMF-supported programmes emphasize certain key aggregate economic variables, including domestic credit, the public sector deficit, international reserves, and external debt. They also emphasize crucial elements of the pricing system – including the exchange rate, interest rate, and, in some cases, commodity prices – that significantly affect the country's public finances and foreign trade.

A successful adjustment programme must elicit an adequate response from the supply side of the economy. Interest rates and exchange rates are particularly important, since they influence savings and investment decisions and, therefore, a member country's growth prospects.

Adjustment programmes, typically, have an impact on income distribution, employment and social services. While the promotion of sound macroeconomic policies and structural reforms contributes to sustained growth and employment, adjustment may also involve short-term social costs to vulnerable groups. The IMF staff analyse the implications of reform measures for vulnerable groups and advise the authorities on how best to integrate social safety nets and their financing into programmes.

Words you may need:

facility n (зд.) схема кредитования, механизм финансирования

address v обращаться (к чему-л.)

concessional financing facility механизм льготного финансирования

regular facilities обычные механизмы финансирования

reserve tranche резервный транш

ameliorate v улучшать

external payments problem проблема внешних платежей

"conditionality" n (зд.) обусловленность кредитов (МВФ)

timely adj своевременный

aggregate economic variables совокупные экономические переменные (величины)

crucial adj решающий

elicit v извлекать, выявлять

sound policy разумная политика

vulnerable adj уязвимый

implication n смысл, значение (событии)

Fiscal Issues Are a Growing Concern of the IMF

(Interview with the IMF's Fiscal Affairs Department Head)

Interviewer: Fiscal discipline is a vital element of the IMF's macroeconomic policy advice to member countries. How would you describe your department's role in IMF surveillance and policy advice?

Head: Since the early 60s when the department was created, we have been largely involved with technical assistance, with helping countries in Africa and elsewhere create fiscal institutions. Recently, the role of technical assistance has broadened.

Int.: Has it been connected with the movement of the economies in transition to market-oriented systems?

Head: Yes, with regard to economies in transition we had to help to create institutions as well as to reform policies. We have been much involved in setting up tax administrations, treasuries, budget offices, as well as creating and reforming customs policies.

Int.: Your role in trying to make tax systems more efficient and equitable is well known.

Head: Thank you. Besides, we have done a lot to improve public expenditure management systems, in other words, all activities that allow a country to gain better control over its expenditure. Work on social safety nets has also become an important activity of our department. And the first reason for this is the major economic policy changes in the transition economies.

Int.: Oh, it is quite understandable, the changes were accompanied by very high inflation that dramatically reduced the income of some groups, such as pensioners, right?

Head: Also, disposable incomes on the whole fell sharply. So, it was necessary to help these countries reform policies to protect the people. The other reason why we became more active in the safety net area was to provide some sort of targeted protection for particularly vulnerable population groups in countries engaged in major macroeconomic adjustment efforts that were accompanied by large withdrawals of subsidies.

Int.: So, your department has become involved in several new areas. I mean poverty, social safety, income distribution, and others. What is the nature of the work in these areas, and how would you assess its relevance to the IMF's main macroeconomic work and its value to members?

Head: Our interest in poverty and social problems has much to do with strengthening the political sustainability of reforms. When a country undertakes a major reform, the distribution of income often deteriorates in the short run. If it deteriorates too much and large groups become impoverished in the process, they may become supporters of populist policies that would defy the reform. We pay attention to poverty to help sustain reform and achieve macroeconomic stability and thereby to expand economic activity and income.

Int.: What future directions and roles do you envisage for FAD?

Head: FAD has been a demand-driven department to a large extent. The pressures on this department are enormous. I take pride in this department's role as one of the world's main fiscal observatories. We have one of the best concentrations of fiscal economists in the world. We try to anticipate fiscal problems and provide intellectual leadership for their solution. I hope, I've made myself clear, haven't I?

Words you may need:

fiscal issues вопросы бюджетно-налоговой политики

customs policy таможенная политика

public expenditure management system система управления государственными расходами

disposable income располагаемый доход

targeted protection адресная защита

relevance n уместность

impoverished adj обнищавший

populist policy популистская политика

defy v выступать (против)

envisage v предусматривать

to a large extent в значительной степени

enormous adj громадный

to take pride (in) гордиться (чём-л.)

I hope, I've made myself clear. Надеюсь, я ясно все объяснил.

Some Facts About the SDR

The Special Drawing Right (SDR) is an international reserve asset created by the IMF in October 1969. SDRs first came into operation in 1970 as a sort of reserve currency to supplement national currencies and gold as the medium in which countries hold their reserves. It is a new type of money known as "paper gold" and used as the first international legal tender. The SDR serves as a unit of account for the IMF and a number of other international and regional organizations. It is also used in transactions between governments and central banks. However, the market for SDRs is limited because they are not held by individuals or private businesses. In addition, a few countries peg the exchange rates of their currencies to the SDR.

The SDR was initially valued by the IMF in terms of a fixed quantity of gold and was redefined in June 1974 as a basket of 16 currencies. The SDR has changed over time. For many years it was an oddity fully understood only by a few central bankers. In 1981, however, in an attempt to extend its usage beyond the IMF and its accounts (which are denominated in SDRs), it was simplified. It is now based on a weighted average of only five different currencies: the dollar, the Deutschmark, the French franc, the pound sterling and the yen. The basket is revised every five years. The weights in the basket reflect the relative shares of countries in exports of goods and services and the relative shares of the five currencies in official reserve holdings.

Since the adoption of the First Amendment of the IMF's Articles of Agreement in 1969, the IMF has been authorized to allocate SDKs to member countries. Decisions to allocate (or cancel) SDKs require an 85 per cent majority vote of the Board of Governors and are made for "basic periods", which, unless otherwise decided, run for five consecutive years. Cumulative allocations to date total SDR 21.4 billion. SDR allocations are distributed in proportion to IMF members' quota shares. Because of considerable expansion in the IMF's membership since SDRs were last allocated in 1981, 38 of the IMF's 181 member countries have never received SDR allocations. Another 37 members have participated in some, but not all allocations.

SDRs are counted as a part of a country's international reserves, along with official holdings of gold, foreign exchange, and reserve position in the IMF. The share of SDRs in global holdings of nongold reserves has declined from 8.4 per cent at the end of 1972, to 6.5 per cent at the end of 1981, and to 2.3 per cent at the end of 1995.

Words you may need:

Special Drawing Right специальное право заимствования

reserve assets резервные активы

legal tender законное платежное средство

revise v пересматривать

weight n вес

reserve holdings резервы

allocate v выделять, распределять

amendment n поправка, исправление

consecutive adj последовательный

to date на сегодняшний день

total v составлять, достигать

reserve position резервная позиция

the Paris Club.

Debt rescheduling is a form of debt reorganization in which debtors and creditors negotiate to defer payments of a principal and interest falling due in a specified interval for repayment on a new schedule.

Some countries find it almost impossible to service their external debts. Recently, rescheduling external debts has become a widely accepted practice. Debt rescheduling occurs at the Paris Club for government and private debt owed to official creditors and at the London Club for debt owed to commercial creditors.

The Paris Club is an informal forum where countries experiencing difficulties in paying their debts to governments and private institutions meet with their creditors to restructure these debts. The name might be quite misleading because in reality the Paris Club is not a club, nor is it a formal international organization. It has no offices, no secretariat, and above all, no charter. The Paris Club is an ad hoc institution with no legal status.

In part, the Paris Club's confidentiality policy has prevented it from becoming known to a wider public. Creditors refrain from releasing any information pertaining to their assessment of a given debtor's economic and financial situation or to the scope of debt relief granted. The onset of the international debt crisis in the early 1980s, however, brought public attention to the Paris Club and to its contribution to resolving the balance-of-payments disequilibria experienced by a growing number of developing countries and by some Central and Eastern European countries.

Over the years, the Paris Club has become a key instrument in implementing the international debt strategy. This strategy rests on two main pillars: internal reform and structural adjustment, supplemented by external financial assistance in the form of fresh money and debt relief. Despite the public's recent discovery of the Paris Club, this forum has existed since 1956, when Argentina agreed to meet in Paris with official creditors to find a mutually acceptable basis for rescheduling payments due on officially supported export credits. In the late 1950s and 1960s, Brazil, Chile, and Turkey sought similar Paris Club reschedulings. Since 1980, 54 countries have rescheduled the total of 186 debt agreements.

Words you may need:

debt rescheduling реструктурирование долга

to defer payments отсрочивать платежи

principal n сумма долга (на которую начисляется процент), капитальная сумма

falling due наступающий (о платеже)

schedule n график

to service debts обслуживать долг

Paris Club Парижский клуб

owe v быть должным

London Club Лондонский клуб

misleading adj вводящий в заблуждение

ad hoc institution специальная (ад хок) организация

to prevent smb from (doing smth) мешать, препятствовать (кому-л. что-л. делать)

refrain (from) v воздерживаться (от)

pertaining to относящийся к

debt relief помощь в погашении долга

onset n начало

disequilibria n (pl) неустойчивость

rests on two pillars покоится на двух столпах

relations between the IMF and the World Bank.

It was not only Brazil that ran up the white flag last week when it halted the defence of its currency on the world foreign exchanges. The defeat of Brazil was also a defeat for the International Monetary Fund, the Group of Seven and the ill-conceived set of policy recommendations which have ensured that a problem in South-East Asia has the potential to turn into a full-scale global crisis.

The orthodox approach insisted on by the IMF in country after country has proved a disaster. If it were a private firm, the IMF's board would have been sacked long ago.

There will doubtless be those who will say that there is no reason to reassess the policies which underpin the free market – deflation, austerity, high interest rates, privatization and capital liberalization.

But last week's events are a crushing blow to that orthodox approach. Their analysis of the crisis has been wrong from the start, and they have not the first idea of what to do now, apart from more of the same.

The IMF has a bankers' mentality. It deals with central banks and thinks of itself as a central bank. It is secretive, lacks transparency and has a fixation with narrowly defined indicators. The IMF's obsession with budget deficits, curbing inflation and financial liberalization has engendered a damaging short-termism that has held back long-term development.

Reducing budget deficits through public-spending cuts while simultaneously freeing up domestic capital markets has simply had the effect of raising debt-servicing costs, thereby crowding out investment in health and education.

There have been signs during the last 18 months of a growing fissure between the IMF's thinking and that of its sister organization – the World Bank. The bank's report on the Asian crisis concludes that insistence on pushing up interest rates was a crucial blunder that worsened the situation, and that it would have been better to have let currencies fall and keep interest rates low in order to keep economies moving forward.

Words you may need:

to run up the white flag выбросить белый флаг

halt v остановить

disaster n бедствие

deflation n дефляция

austerity n строгая экономия

fissure n трещина