Camdessus

WASHINGTON (CNN) -- The managing director of the International Monetary Fund, Michael Camdessus, said Friday he believes Russia's acting Prime Minister Viktor Chernomyrdin understands the severity of Russia's economic crisis.

Camdessus, who talked to reporters in Washington Friday, said he advised Chernomyrdin to stay away from so-called populist reforms. The two met for two days in the Crimea beginning Wednesday, just days after Russian President Boris Yeltsin had reinstated Chernomyrdin as the prime minister.

Camdessus said he told Chernomyrdin that reverting to a lax monetary discipline would lead to disaster for Russia.

"I told him unambiguously that this would lead to disaster and, of course, I wouldn't see himself associating with this kind of policy," Camdessus said.

The populist reforms would include the printing of rubles to help Russia pay its debts, which could lead to hyperinflation. Tight price controls are also under consideration.

Chernomyrdin

The IMF would like to see Russia engaged in what Camdessus called a "stability-with-growth" scenario. This would include a quick reaction to restore financial stability, establishment of a firm monetary discipline and control over the liquidity of banks.

A currency board, he said, could also be an important -- but not urgent -- part of this new economic package.

Camdessus said nothing will go ahead without a strong government commitment and market reform.

"The government would have to push ahead forcefully with structural reform aimed at encouraging private sector development," Camdessus said. "This is the only way to get the revival of the economy and the reforms everybody is looking for. The sooner these reforms start the better."

Camdessus also said he believes Chernomyrdin is ready to take charge of his country's economic crisis, which prompted Yeltsin to sack his Cabinet for the second time this year.

Chernomyrdin, who was fired in March, was brought back in a surprise move last Sunday as Yeltsin sought a more experienced leader to replace the youthful Sergei Kiriyenko and contain the crisis.

"He accepted this responsibility in lieu of the situation of the country," Camdessus said of Chernomyrdin.

During their meeting, Chernomyrdin expressed to Camdessus that the bad relationship between the Duma, or lower house of parliament, and the previous government helped create the problem. The IMF chief also said Chernomyrdin is looking into creating a coalition government that would hold a common view with the Duma.

"He is deeply involved in creating a platform with the leadership of the Duma and of the Federation Council," he said.

Chernomyrdin, Camdessus said, is committed to working with the IMF.

"The prime minister indicated that he understood the magnitude of the deterioration of the situation in a very short lapse of time," he said. "He saw the situation possibly tragic, no doubt, but not despaired. And he told me that the Russian government wanted to act to restore confidence."