by During the first Putin presidency, the Russian government gave a very high priority to paying back Russian international debt and used quite a lot of the income from oil to do this. Jeffrey Sachs answers why (also read the last paragraph): The lack of Western assistance The lack of Western assistance was grim and was my greatest frustration[32] during late 1991 and 1992. The early days were inauspicious to say the least. When the G-7 deputies came to Moscow in late November 1991, just a few days after Gaidar had come to power as head of Yeltsin’s economic team, the main focus of the G-7 message was the urgency that the Soviet Union should continue to service the external debts at any cost. There was no discussion of the upcoming economic reforms, and no realism among the G-7 deputies about the extreme desperation of the economic scene. Gaidar was warned by the assembled powers that day that any suspension of debt payments would result in the immediate suspension of urgent food aid, and that ships nearly arrived at the Black Sea ports would turn around. Russia in fact continued to service the debts for a few more weeks before completely running out of cash by February 1992. In December 1991 I had continuing discussions with the IMF about Western assistance for Russia. The IMF’s point man, Mr.
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During the first Putin presidency, the Russian government gave a very high priority to paying back Russian international debt and used quite a lot of the income from oil to do this. Jeffrey Sachs answers why (also read the last paragraph):
The lack of Western assistance
The lack of Western assistance was grim and was my greatest frustration[32] during late 1991 and 1992. The early days were inauspicious to say the least. When the G-7 deputies came to Moscow in late November 1991, just a few days after Gaidar had come to power as head of Yeltsin’s economic team, the main focus of the G-7 message was the urgency that the Soviet Union should continue to service the external debts at any cost. There was no discussion of the upcoming economic reforms, and no realism among the G-7 deputies about the extreme desperation of the economic scene. Gaidar was warned by the assembled powers that day that any suspension of debt payments would result in the immediate suspension of urgent food aid, and that ships nearly arrived at the Black Sea ports would turn around. Russia in fact continued to service the debts for a few more weeks before completely running out of cash by February 1992.
In December 1991 I had continuing discussions with the IMF about Western assistance for Russia. The IMF’s point man, Mr. John Odling Smee, who lasted for a decade as the head of the IMF’s efforts, was busy telling the G-7 that Russia needed no aid, that the “balance of payments gap” as calculated by the IMF was essentially zero. I believe that the IMF was simply parroting the political decisions already decided by the United States, rather than making an independent assessment. This is just a conjecture, but I make it because of the very low quality of IMF analysis and deliberations. They seemed to be driving towards conclusions irrespective of the evidence. The IMF’s approach was in any event just what the rich countries wanted to hear. The technical methodology was primitive beyond belief.