The International Monetary Fund has praised Russia for its new-found fiscal zeal, hinting it would reward an uncompromising austerity package with a vital $670 million (£475m) loan instalment within weeks.

Hailing the tough fiscal measures announced yesterday as the correct panacea for a struggling economy with a vulnerable currency, the International Monetary Fund (IMF) said it would speed up approval of the loan tranche, likely to restore a measure of confidence to nervous markets.

"We will speed this process up so it should be possible to fix the date of (an IMF board) meeting within a few weeks and certainly before the end of June," top IMF official Mr John Odling-Smee said.

"I expect the board to decide (on the tranche) on the day they have the meeting," Mr Odling-Smee said. "If they decide yes as I expect, the money would become available within a couple of days."

The IMF tranche is seen as a vital step towards restoring confidence in Russia's financial system, creaking under the strain of an investor exodus, tumbling stock and bond markets and a vulnerable rouble.

"This is the news that we've been waiting for," said Mr Rory

MacFarquhar, an economist with the Russia-European Centre for Economic Policy.

"Presumably it means that the IMF is prepared at a pinch to cut through some of its own bureaucracy and rally behind the government at a time of great need, and that's exactly what we're in at the moment," he added.

The government package detailed a series of tough steps, pledging to squeeze five billion roubles (£574 million) out of tax delinquents in the next month alone, and to speed up privatisations to garner a further 15 billion roubles ($2.43 billion) this year.

Russian President Mr Boris Yeltsin sacked the head of the tax service, Mr Alexander Pochinok, replacing him with reformist Mr Boris Fyodorov, and promised to pay close personal attention to financial developments, using his head-of-state contacts to solicit international support in times of trouble.

"It is at such critical times that the authorities are tested for strength, maturity and ability to act," Mr Yeltsin said, reserving praise for his own government for weathering the financial storm.