financial area, the legislative frameworks for bank supervision and
for combating money laundering were strengthened, and there was some
limited deregulation of the foreign exchange system.
There has also been a marked change in the attitude to foreign loans
in Russia since the devastating banking crisis of August 1998, when
the Russian government was compelled to declare a default on its
most obviously as a result of the crisis was the degree of
responsibility of politicians and policymakers in framing and
implementing economic policies and, in particular, fiscal policy.
The specter of seemingly unmanageable external debt helped forge the
political consensus in favor of budgetary prudence that has been
maintained under President Putin.
Fiscal restraint in the face of burgeoning oil revenues allowed the
government to quickly rebuild international reserves, which are viewed
not only as a comfortable cushion against temporary adverse
developments, but also as sufficient to provide policymakers with room
for maneuver in the face of more permanent shocks.
In 2000 the Central Bank’s gold and currency reserves stood at $11
billion, in 2002 they increased to $50 billion, and by the end of
2003 they totalled $72 billion.
Russia’s external debt - at about 40 percent of gross domestic
product - is no longer regarded as a prime source of vulnerability.
As of December 2003 Russia’s foreign debt stood at
$115 billion. The
foreign debt/GDP ratio is steadily going down as a result of
Russia’s recent economic rebound, as well as regular debt
repayments. Russia repaid $14.5 billion in 2001 and $14.2 billion
in 2002. It successfully met a spike in debt service in 2003,
repaying $17 billion. Russia’s debt-servicing obligations have also
been lightened somewhat by rescheduling agreements that have
resulted in a favorable maturity structure that stretches through