Brookings Papers on Economic Activity

Official Creditor Seniority and Burden-Sharing in the Former Soviet Bloc

Abstract

THE COLLAPSE of the Soviet empire has created an unprecedented opportunity for political and economic reform in Eastern Europe and the former Soviet Union (FSU). In response, the Group of Seven industrialized democracies (G-7) has asked the two main international financial institutions (IFIs)-the World Bank and the International Monetary Fund (IMF)-to assume a leadership role in providing loans to the region. (Private capital flows are expected to be relatively small.) Current estimates suggest that the IFIs may be responsible for close to half of overall planned aid to the FSU. Recently, the IMF announced plans to lend $25 billion to $30 billion to the FSU over the next four years; the World Bank is expected to pitch in an additional $12 billion to $15 billion