The Russian Economy in the Post-Soviet Era

The troubled economic conditions together with political turmoil led to the dissolution of Soviet Union in 1991.

After the breakup of the Soviet Union in December 1991, Boris Yeltsin (Yeltsin) became the President of Russia. During his first term as President, Yeltsin introduced a program of macroeconomic stabilization and economic restructuring. The macroeconomic stabilization measures included reducing the government budget deficit, increasing government revenues, and controlling the expansion of money supply including the subsidized credit given to entrepreneurs.

However, in the early years of the program, the government was not successful in reducing government spending, or in controlling credit expansion and money supply growth. But later, with strict fiscal and monetary policies, the government achieved some of its objectives.

In 1996, Yeltsin was reelected as President of Russia. In the next two years, Russia experienced declining foreign exchange reserves and a fiscal situation that started to worsen again. In August, 1998, Russia faced a financial crisis when the value of the ruble declined by 75 percent and the country defaulted on its debt.