BPEA | 1992 No. 1

Stabilization and Economic Reform in Russia

Stanley Fischer
Stanley Fischer Vice Chairman of the Board of Governors of the Federal Reserve System
Discussants: Lawrence H. Summers and
Lawrence H. Summers Charles W. Eliot University Professor and President Emeritus - Harvard University
William D. Nordhaus

1992, No. 1

ONLY A HANDFUL of events in this century are as important as the creation
and eventual collapse of the Soviet Union. That the Soviet Union
disappearedw ith minimall oss of life is as extraordinarya s its demise.
While the political changes have been exceptional, the pace and extent
of economic change have been sweeping, too. Less than four months after
the Soviet Union was dissolved, Russia had decisively liberalized
most prices and was on the road to macroeconomic stabilization and
convertibility of the ruble. The budget deficit has been cut from 20 to less
than 10 percent of gross domestic product (GDP). The inflation rate has
been declining, after a price level adjustment. At the end of April 1992,
Russia joined the International Monetary Fund (IMF) and the World
Bank. Well before the end of the year, Russia will be receiving IMF financial
support to implement a stabilization and reform process that
probably will include converting the ruble at a fixed rate.