ABSTRACT
Initially, Mikhail Gorbachev seemed most worried about the Soviet Unions growing lag behind the West in the rate of what the Soviets refer to as "scientific-technical progress." To accelerate the rate of technical progress, the final draft of the Twelfth Five-Year Plan provided for an increase in the growth rate for investment, which was intended to be much faster than that of consumption. Budget receipts from profits taxes, the single most important source of tax revenue, were lower in 1989 than in 1986, owing mainly to the economic reform provision that permitted enterprises to keep a much larger share of their profits in order to finance their own investments. The monetary and fiscal crisis is characterized by three interrelated facets—an enormous budget deficit, a huge monetary overhang in the form of savings bank deposits and cash in the hands of the population, and large and rapidly mounting cash-equivalent balances in the enterprise sector.
