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Friday, 31 December, 1999, 12:42 GMT
Yeltsin's economic legacy

Queuing to change money The economic transformation has not gone smoothly


By economics correspondent Andrew Walker

Boris Yeltsin has presided over a period in which his governments have tried to transform Russia into a market economy.

Yeltsin resigns
The effort has been assisted by loans from the International Monetary Fund, the World Bank and governments of the rich countries.

But problems in the implementation of reforms have led to the aid being interrupted on a number of occasions.

Mr Yeltsin stands down at a time when the economic outlook is improving and some of the damage done by the financial crisis of August 1998 is being reversed.

Oil prices have risen strongly this year. The energy industry is the government's best source of tax revenue, so the public finances finances have improved strongly.

Poor tax collection has been one of post-Communist Russia's most serious and persistent economic problems.

Widespread corruption

The improvement has been such that Russia has, unusually, beaten the targets set in a loan agreement with the International Monetary Fund.

But it has still to implement other specific changes the IMF wants in areas such as bankruptcy law, and better financial monitoring of social security funds.

The IMF is also concerned about allegations that some of its money may have been in effect stolen, although it insists that it has found no evidence of that.

But it does underline a more general concern about Russian economic reforms; that widespread corruption is a serious obstacle to the creation of an effective market economy.

Over the period of Mr Yeltsin's presidency, Russia's general economic performance has lagged far behind that of some other former communists states in Eastern and Central Europe.

Russia has grown only fitfully, and overall, the economy has shrunk by more than 40% in the last 10 years.

But Mr Yeltsin and his governments have a better record on inflation, which they managed to keep under control despite last year's financial crisis which could easily have led to a spiral accelerating price rises.

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See also:
08 Dec 99 |  Business
IMF delay angers Russia
12 Nov 99 |  The Economy
Russia and IMF locked in loan talks
24 Sep 99 |  The Economy
Russia: The IMF's biggest failure
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