Country Profile - Russia

Russia is the largest country in the world, spanning 11 time zones and covering one-eighth of the world's land surface. It is a combination of 89 different entities that constitute 16 autonomous republics, five autonomous regions, 10 national regions and several provinces and metropolitan cities. Despite being hit by one crisis after the other over the decades, Russia has always managed to emerge as a survivor. The very mention of the country's name reminds one of communism, World War II, the Cold War and political and economic upheavals. A majority of these economic upheavals were experienced when the country was transforming itself from a centrally planned economy to a free market economy after the dissolution of Soviet Union in 1991.

However, difficulties in implementing these reforms and excessive dependence on short-term borrowings led to a severe financial crisis in Russia in 1998. A drastic decline in world prices for oil and minerals (major export earners of Russia) and the Asian financial crisis during this period, added to the country's financial problems.

This resulted in a sharp decline in the value of its currency (ruble ), a drastic fall in foreign direct investments (FDIs, defaults and delays in payments on sovereign and private debts, the breakdown of the banking system (adversely affecting commercial transactions) and high inflation...