Russia's central bank reserves fell $600 million in the two weeks to July 16, leaving just $11.5 billion. It's the biggest two-week fall in reserves since last summer's financial crisis.

The plunge in reserves is reminiscent of the $4 billion that flowed out of the central bank in the weeks before the government defaulted on its Treasury debt and, in effect, devalued the ruble last August. Russian banks and the economy are still reeling.

"This seeming incautiousness of the central bank is because they're assuming they'll get the money from the IMF," said economist Sergei Prudnik at Moscow brokerage Troika Dialog, referring to an expected disbursement from a $4.45 billion International Monetary Fund loan program.

The IMF may agree to release a first $630 million installment from the 18-month loan as early as next week.

"The market consensus is that the IMF money will come in the beginning of August," Prudnik said.

More Than $1 billion Due By End Of July The loan's arrival will be none too soon.

Russia, the IMF's biggest borrower with outstanding loans of about $18 billion, has to repay $700 million to $1 billion to the IMF for previous loans this month. It faces total IMF repayments of $4.5 billion this year.

The government must also make $320 million in Eurobond coupon payments Friday.

On top of helping out with foreign debt payments, the central bank has been busy defending the ruble all month after bowing to IMF demands to free up currency trading at the end of June.

"The dollar has been dropping by 2 kopecks every day, and seeing these two round figures every single day is unnatural," Prudnik said.

The ruble's eerie steadiness in July coincides with the new fall in reserves from their 1999 high of $12.2 billion at the end of June.

"We should get worried if it does fall that much again next week," said Roland Nash, chief economist at investment bank MFK Renaissance. "It's probably just a result of the central bank making one last round of payments to the IMF."

Adding to the pressure, the central bank's reserves are worse than they look. About $4 billion of the $11.5 billion total is made up of gold, which the central bank values at $300 per ounce.

However, the international gold market values the metal at nearer to $255 an ounce, indicating that the central bank is overstating the value of its gold by as much as $600 million.

Still, the arrival of the IMF funds could spell an end to the threat to reserves.

"What will happen next is the Ministry of Finance will stop using central bank reserves on external debt payments," Prudnik said.

Russia's balance of trade is helping as well, after the ruble's fall from around RUB6.5 to the dollar a year ago to a current level of RUB24.24 cheapened exports and made imports far more expensive.

Russia ran a trade surplus of about $11 billion in the first five months of 1999, well up from $300 million in the same period last year.

"As far as we know there's still a net inflow into Russia on the current account, even taking into account capital flight," MFK Renaissance's Nash said. They're running a $2-3 billion trade surplus a month at this moment."

Still, politics could shake up the recovery scenario.

"After September it's hard to predict what will happen because of politics," said Troika's Prudnik, referring to preparations for the December parliamentary election. "I don't think the ruble will be lower than RUB28 or RUB30 to the dollar."