MOSCOW (dpa) – Russia’s economic upswing was only a short-lived one. It turned out that the heady growth rates in the wake of the rise in energy prices and of the drastic devaluation of the rouble in August 1998 were both seductive and deceptive.
Now all the signs are pointing to 2001 being the year when the boom is over. Since last November, the economy has stopped growing, warns Kremlin economic policy adviser Andrei Illarionov.Experts are criticising the fact that Russia failed to take advantage of the favourable period to carry out the necessary structural reforms in the economy.Now falling oil prices will contribute considerably to the economic falloff. Beyond this, a serious problem could be the still- unresolved question of Moscow’s debt repayments falling due to the Paris Club of creditor countries.The 3.5 billion dollars falling due were not initially set down in the budget. But if Moscow were to meet the payment, it would cause a large gap in the social welfare budget.All this follows impressive macroeconomic parametres for the country’s performance in 2000. The gross domestic product grew by 7.6 per cent, following 3.2 per cent in 1999, and industrial output rose by 9.2 per cent, from 8.1 per cent.Further, Russia’s currency reserves reached a record level of 28.6 billion dollars, compared with 12 billion dollars at the end of 1999.During the course of 2000, the rouble’s value remained relatively stable vis-a-vis the dollar and towards the end of the year reached its “limit” of 28 roubles per dollar.And, Russia started out the year 2001 with a deficit-free budget.But the economic projections are now less favourable in direct relation to the downturn expected on the energy market, in view of the fact that oil and gas exports make up the lion’s share of Russian earnings.Experts now estimate that Russia will earn 12 to 18 dollars per barrel of oil this year, as against the 19 dollars level foreseen in the budget.Economic analysts also criticise the fact that the structural reforms in the economy have come to a virtual halt. Michael Franz, chairman of the Austria Creditanstalt bank office for Russia, calls 2000 “a year of wasted opportunities” in this regard.New political processes did get under way in Russia which were encouraged by the favourable world economic climate, Franz said. But investors had been expecting much more decisive steps which, however, did not materialize.Allan Hirst, president of Citibank’s office in Moscow, said a further failing had been the lack of reforms carried out in the banking sector, while the chairman of the State Duma’s budget committee, Alexander Shukov, said that despite the tax reform, other important structural reforms had been neglected.He mentioned reforms needed regarding ownership of real estate properties and in labour laws.Illarionov, economic policy adviser to President Vladimir Putin, is even harsher in his criticisms.“The government has not understood how to manage the economy under the unique conditions which materialised during 2000,” he said.Instead of taking measures toward developing the economy, Illarionov said, “the executive and legislative branches simply took pleasure in dividing up the extra revenues”.Now, one of the main dangers facing the Russian economy could be the slackening of the economic pace in western countries.“A recession, a weakening of the western markets, would be extremely uncomfortable for Russia,” warned Vladimir Mau, head of the government’s working group for economic reforms.
