Does the government keep back the truth?

For too long, the authorities did not want to admit the economy went down. Last week, they however had to express one of the key parameters had been caused to collapse. The Central Bank first deputy chairman, Oleg Vyugin said inflation would exceed 15-percent level, according to the year results. While in the budget only 12-14-percent inflation is foreseen. In early December, the Government acknowledged the inflation level of 14 percent would be somewhat exceeded. Though, inflation of over 15 percent is too much, it is a real collapse of the governmental policy.

While it is not the only collapse. Next summer, Russia could be on the verge of the next financial crisis. Spite all positive reports, there are too many signs of the economical situation worsening. There are already several macroeconomic parameters which correspond with that ones observed before the 1998 default. While separate figures directly witness intensification of the crisis phenomena. The government talks about favourable economical results, though the situation becomes more and more similar to the Brezhnev time, when behind the reports about the people’s economy achievements the coming collapse was hidden.

Last quarter of 2002, Russian industry got to real stupor. The growth of production volumes stopped. The only islands of the growth, which save at least a zero dynamics of Russian economy, are export industries: oil, gas, non-ferrous and ferrous metallurgy. Volumes of the production oriented for internal consume do not grow at all and even reduce. Therefore, real money incomes which, according to vice Prime Minister Valentina Matvienko, grew in comparison with September 1998, are a cunning piece of evidence of the socio-economic development. For these achievements are secured, like in 1997, at the expense of import supplies.

Russian economy is still economy of paradoxes. Money supply grows, while investments reduce. There is money, though there is no sphere to invest them. Industry needs money, though it cannot guarantee its own growth.

External crises is a special ground of dander. The country is very dependant of oil prices. Any oil price decrease will seriously injure Russia. If the US starts its operation in Iraq in February, it hardly will finish it by the end of spring. Therefore, oil prices will decrease. While at this very time, Russia should make payments on its external debt.

And finally, summer 2003 is the time of the new budget make-up, which coincides with the State Duma pre-election campaign. In the pre-election year, serious economy reforms hardly could be carried out, though the new budget could be very possible subotaged. Deputies, even that ones from pro-Kremlin factions, will certainly do their best to gather the necessary vote on criticizing the government course. The political background will be for sure negative for economy and positive for crisis.

While comparing these negative tendencies and alarming expectations, one could conclude the crisis signs will reach its peak by late summer – free autumn.


Translated by Vera Solovieva

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Author`s name Editorial Team