II. Statement by Prime Minister Kiichi Miyazawa

2. Support for macroeconomic stabilization

Prime Minister Miyazawa: With regard to support for macroeconomic stabilization, it was stated that significant progress was made in the form of the release of the S1.5 billion first tranche of the newly established International Monetary Fund (IMF) systemic transformation facility. We very much hope that the Government of Russia will assume further concrete measures to control inflation and reduce the budget deficit and reach an early agreement on a standby arrangement through expeditious negotiations with the IMF. On support for structural reform, we welcomed the approval by the World Bank Executive Board of $610 million oil sector rehabilitation loan in this area of structural reform of energy. Also, the leaders pointed out the importance of legal institution building in Russia in order to increase private sector investment. At the same time, we also expressed that expeditious preparation is proceeding under the European Bank for Reconstruction and Development (EBRD) to establish $300 small- and medium-size enterprise support fund. With regard to support for privatization of large enterprises, the G-7 leaders agreed on the establishment of a special privatization and restructuring program amounting to $3 billion for the purpose of promoting corporate restructuring as well as providing technological support and regional support. We also reaffirmed that it was necessary to encourage the private sector in order for us to share methods and technology for improved productivity with the Russians. On trade expansion, we believe that improved access for Russian products in the international market, including a general system of preferences, will contribute significantly to structural reform in Russia. The G-7 countries intend to cooperate with Russia toward GATT membership. Effective implementation of export controls by Russia will also promote relaxation of the COCOM regulations. The G-7 has been providing large-scale export credits through various institutions. We believe that access to such institutions holds the key to the conditions for generous rescheduling conditions agreed on in April with Russia.

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