The Collapse Of The Stabilization Program And The Imperative Of Transition To A Mobilization Model: Retrospective

Detailed attempts have been made in the pages of >i>Rossiiskii ekonomicheskii zhurnal>/i> and in features of other publications>sup>1>/sup> to demonstrate that the government's Program of Economic and Financial Stabilization was not an anti-crisis program. Its basic purpose was reduced to the next increase in foreign borrowing, which was supposed to support the GKO-OFZ [state short-term bond-federal loan bond] pyramid by converting a portion of domestic short-term obligations into long-term foreign obligations, as well as to provide additional guarantees that a fixed exchange rate would be maintained to restrain foreign speculators in the market for Russian state bonds. The real point of the anti-crisis measures in the program was to offer financial speculators the opportunity to pull their capital out of the country with the planned superprofits, and without the risk of losses from a devaluation of the ruble. The International Monetary Fund [IMF] credit was sufficient to hold the exchange rate stable for only a month, and that time was used by foreign financial speculators to get out of the GKO pyramid before it collapsed.