World Bank to lend directly to Russian regions

WASHINGTON, Dec 18 (Reuters) Cash-hungry Russian regions could get up to 0 million a year in financing from the World Bank without financial guarantees by the federal government under a new strategy approved by the lender last week, the bank's country director for Russia said on Monday.

Moscow stripped Russia's 88 regions of their rights to borrow abroad after an economic crisis in 1998 in which their bad loans contributed. Until now, the regions could only borrow abroad to refinance old debt or raise loans in the local currency.

Still, every regional project financed by the bank will require prior approval of the federal government.

World Bank Country Director Kristalina Georgieva said in an interview the federal government hoped the lending exercise would promote fiscal discipline, transparency and investment in credit-worthy regions.

''It will give them more resources and some exposure to working with an international pool of experts,'' she said.

Initially, the initiative would finance one to three regional projects a year, she said, adding that it would cover capital investments in municipal or rural infrastructure and utilities, with some local authorities interested in tourism and forestry.

REUTERS SBA KP2003