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Consequences of "shock therapy"

Social and economic development. Consequences of "shock therapy".

Results of market reforms in Russia by means of "shock therapy", realized in 1992-1993 by cabinet of E. T.Gaydar, showed their internal inconsequence and impracticability. Structural reorganization of economy and mass voucher, and then monetary privatization did not result in creation of "middle class" - a layer of proprietors-shareholders. On the contrary, the policy of the Government in sphere of economy resulted in arbitrariness of officials, illegal privatization, wild outburst of organized crime.

Social consequences of economic policy provided popularity and success to slogans of opposition party, stimulated searches for new, more moderate variants of reforms realization. The major tendencies in development of economy of Russia in 1994-1997 were attempts of stabilization of steadily falling level of industrial production, liquidation of budget deficit and final bridling of inflation and leveling of incomes of Russian people. The priority task for the Government was adoption of rigid financial discipline and reduction of on-budget expenditures. One of the most complicated problems became chronic arrears in wages and pensions, national debt, which reached enormous sums in the majority of Russian regions.

Money from realization of privatization program was seen as the major source of public revenues. In autumn of 1996 there was carried out a campaign on realization of mortgaging auctions - sale on competitive basis of state share holding of the largest industrial enterprises of the country in temporal management to private companies, which have financial resources. The greatest resonance, including political, had the auction on transfer for asset management of state share holding of Russian Joint-Stock Company 'Norilsk nickel'.

In opinion of the majority of experts the economy of Russia by the end of 1997 had passed the stage of long structural crisis. The majority of parameters testifies to some stabilization of industrial production. For the first time in the last seven years in our country the volume of gross domestic product, in comparison with 1996, did not reduce, but grew 0,2 %. 1997 was marked by significant reduction of inflation rate, which was limited to 12,5 %. Thus, Russia entered the stage of relatively stable, though rather high by world standards, prices. One of the major tools of the Government in achievement of financial stabilization was severe regulation of the exchange rate of the Russian currency, establishment of so-called "currency corridor" - firm limits of rouble - US dollar fluctuations.

The fixed exchange rate of rouble was provided by considerable foreign currency reserves of the Central bank of Russia, amounting in the middle of 1997 to 25 billion dollars, and also gold state stock (about 380 tons). A recognition of rouble stability was the announcement made by the Government in August 1997 of bank notes denomination from January 1998 in proportion 1000:1. The result of it was returning into the monetary circulation of traditional monetary unit - copeck. In 1997 for the first time in many years domestic industrial production began to grow, its volume by the end of year made already about 1,5 % on the average in extractive and processing industries.

Tasks of economic policy of the country in 1998 till 2000 were determined by medium-term government program. In the basis of guiding lines of structural reorganization and economic growth lie the parameters determined, first of all, by money and credit policy. One of the conditions of successful development of Russian economy is creation of favorable investment climate, which may be made possible by consecutive realization of tax reform and re-structuring of so-called natural monopolies.

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