chapter  10
Impediments to the Macroeconomic Stabilization of Russia
WithManuel Hinds
Pages 15

The Parliamentary elections of December 1993 marked a watershed in the process of economic reforms in Russia Although they reelected Boris Yeltsin as president, the voters seemed to reject the reform program his government had pursued since the formation of an independent Russian state in late 1991. In January 1994, as the new government was being formed, the threat of hyperinflation arose. However, contrary to all expectations, the new government reached an agreement with the International Monetary Fund, reduced the rate of monetary creation, increased interest rates and continued with the privatization program. As a result, the rate of inflation continued to fall and the real interest rate, as measured against the inflation rate of the previous twelve months, went from highly negative to highly positive for the first time since July 1992.