Chapter

Chapter II.3 The New Reform Effort

Author(s):
International Monetary Fund
Published Date:
December 1991
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1. THE REFORM DEBATE

The deterioration of Soviet economic performance during the late 1980s, continuing at an accelerating rate into 1990, pointed clearly to the inadequacies of the approach to reforms followed since 1985. In particular, it illustrated the risks of weakening the traditional command mechanisms regulating economic activity without at the same time making rapid progress towards the creation of markets and market-based control instruments and the elimination of price distortions. The worsening economic conditions, against a more difficult political backdrop, created the climate for, in President Gorbachev’s own words, an “irrevocable choice” to move to a market economy.

While the goal was set, the path to it nevertheless remained far from clear. The second half of 1990 witnessed a sharp and wide-ranging debate on the means, timing and sequencing of the transition to a market economy, a debate which became intertwined with more political issues, notably the sharing of power between the union and the republics. No fewer than four alternative programs of transition were presented to the USSR Supreme Soviet1 in the months before the “Guidelines for Stabilization of the Economy and Transition to a Market System” were unveiled by Mr. Gorbachev in mid-October.

At the risk of some oversimplification, the main issues can be highlighted through a brief, and somewhat stylized, comparison of two programs: the one presented in September 19902 by the Government (hereafter referred to as the Abalkin program),3 and that prepared by the group set up under a Gorbachev-Yeltsin agreement in August, led by Academician Shatalin (the Shatalin program).

The two programs differed mainly on the following issues: (a) the roles of the union and the republics in economic policy making; (b) the pace of privatization and price decontrol; (c) the mechanisms of social protection; and (d) the strategy to reduce the budget deficit. Broadly speaking, the model of intergovernmental relations underlying the Abalkin program can be characterized as federal, and that of the Shatalin program as confederal. Accordingly, republics would have exercised much greater control over price policies, privatization and the distribution of deficit goods under the Shatalin approach than under the Abalkin program. In addition, the Shatalin program advocated that the taxing authority should be vested primarily in the republics, which would agree on a formula for sharing revenue with the union, to finance the latter’s activities.

The Shatalin program set specific (rather ambitious) targets for the scale and pace of privatization of government property, including several large-scale industrial enterprises, while the Abalkin program envisaged both a more gradual approach to privatization, and the maintenance, even over the longer term, of direct state control over at least one third of the productive structure.

The programs differed also in the approach to price reform. The Abalkin program advocated the maintenance of union-level administrative controls over the bulk of prices in the first year of the transition, and a gradual liberalization, or decentralization of control to the republican and local levels, thereafter. Administered prices of subsidized commodities would be raised sharply at the beginning of the program, in order to drastically reduce consumer subsidies. The program envisaged that households would be compensated for these price increases and that wages and pensions would be indexed to subsequent price changes. The Shatalin program advocated instead faster price liberalization (prices of 70-80 percent of goods would be freed by end-1991), coupled with very tight financial policies, and extensive sales of government assets to absorb the excess liquidity in the economy. Prices of a narrow range of basic goods would remain frozen, however, through 1991; wages would be indexed to a “minimum consumer basket” in which these frozen prices would weigh heavily. This would help prevent triggering an inflationary spiral.

Although both programs emphasized the need to cut the budget deficit (Shatalin advocating its outright elimination at the union level), in neither instance did the measures proposed appear adequate to the task, especially in view of upward pressures on the deficit in 1991, stemming from already enacted tax and pension reform legislation (see section 2.b(1)).

2. THE PRESIDENTIAL REFORM PROGRAM

Following a period of intense debate on the two programs and unsuccessful attempts to work out a compromise, President Gorbachev, on the strength of emergency powers conferred on him in late September by the Supreme Soviet, took steps to arrest the threatening breakdown of economic relations by issuing a decree ordering enterprises to honor existing contracts and maintain established supply links through the end of 1991. At the same time, the President attempted to secure a minimum political consensus on a reform program by presenting the “Guidelines”—approved by the Supreme Soviet on October 19, 1990—a framework which left considerable scope to individual republics to determine the content and pace of reforms in their respective regions. In what follows, an overview is presented of the presidential program, the policies announced in the late autumn of 1990, and the outlook for 1991. Section 3 presents a summary assessment of the proposed policies and reforms.

a. Broad strategy and sequencing

Although the presidential guidelines, in contrast to the Shatalin program, do not specify a timetable for the various phases of the transition process, they outline a broad sequence. Emphasis is placed in the first stage of the program on: (a) stabilizing the financial situation, through steps aimed at reducing the budget deficit, absorbing excess liquidity in the economy and moderating monetary growth, reforming the banking system, tightening financial constraints on enterprises, and improving the external accounts; (b) preventing disruptions of production and established economic links, and improving the supply of consumer goods in the market; and (c) beginning systemic and structural reforms, notably the recognition of private property rights, sales of government property and land reform.

A second stage of the transition process would see a gradual liberalization of prices (still maintaining surveillance over those freed), accompanied by the maintenance of tight financial policies, the setting up of a social safety net and further progress in privatization and demonopolization.

Further structural reforms, including of the labor compensation system, the tax system, and the housing market, would follow. In the final stage, financial policies would be gradually eased, and foreign trade and payments progressively liberalized, as external constraints became less binding.

b. Macroeconomic policies

(1) Budgetary policies

The Soviet authorities made significant efforts in 1989 and 1990 to reverse the steady deterioration of the public sector finances which took place from the mid-1980s (see Chapter II.2). The presidential guidelines called for further progress in this respect, targeting that the state budget deficit should be contained to rub 25-30 billion, or 2½-3 percent of GDP,4 in 1991, a level expected to require no resort to financing by the Gosbank. However, the draft budget for 1991, submitted to the Supreme Soviet in December 1990, foresaw a deficit (rub 59 billion) virtually double the target in the presidential guidelines. This budget clearly illustrated the difficulty of securing a substantial and lasting improvement in the public finances without fundamental reforms, not only in the fiscal but also in other systemic areas, in particular price and social policies.

The draft budget also highlighted the difficulty of conducting fiscal policies appropriate from a macroeconomic standpoint until clear rules for the apportionment of revenue raising powers and expenditure responsibilities between the union and the republics have been defined and accepted. Indeed, since agreement could not be reached between the authorities of the union and of some republics on the proposed budgets of the latter, the budget submitted to, and recently approved by, the Supreme Soviet refers only to the union. Preliminary projections for the consolidated state budget, based on current information on the republican budgets, are therefore subject to considerable uncertainty.

Given continuing uncertainty about the future course of price policies, in particular regarding retail prices (see section c.(6)), the draft 1991 budget was based on the assumption that the retail prices of subsidized commodities would remain unchanged. At the same time it was assumed that a number of retail prices of commodities subject to the turnover tax would be decontrolled, with a view to preventing a loss of tax revenue following expected adjustments in wholesale prices. Accordingly, total price subsidies paid from the union and republican budgets were projected to nearly double in nominal terms, and revenue from the turnover tax to decline markedly in relation to GDP. In the union budget approved by the Supreme Soviet, no revenue is, in fact projected for the turnover tax, on the assumption that it will be fully retained by the republics.

A further element of pressure on the 1991 budget will be represented by wide-ranging improvements in social benefits, including more liberal provision of various welfare payments and a comprehensive reform of pensions.5 These improvements are expected to lead to an overall 45 percent increase in social benefits, even before allowance for their indexation to prices and for any cost entailed by a proposed new unemployment compensation scheme. Other substantial increases in spending (35 percent or more) are projected for R&D, environmental programs, health, education, and defense. The more than 35 percent increase in defense expenditures was considered by the authorities to be consistent with the previously announced target of a decline in real terms, since the deflator for defense expenditures was projected to rise by around 50 percent.

The growth of tax revenues in 1991 is likely to be adversely affected by the scheduled reduction in taxation of enterprise profits and by the replacement of much of the price equalization taxes from foreign trade with border taxes; in the union budget, receipts from profit taxes are projected to fall by nearly one third.

With a view to offsetting the adverse impact of some of these factors on the deficit, the authorities have taken a number of measures, some of which, however, will involve no lasting improvement in the public finances. Specifically, the measures include:

  • (1) a trebling (from 12 percent to 37 percent) of the present rate of the payroll tax on employers and the introduction of a payroll tax of 1 percent on employees;

  • (2) the introduction of a 5 percent broad-based sales tax;

  • (3) rental payments by enterprises engaged in the exploitation of nonrenewable natural resources, such as oil and gas—this levy was expected to yield rub 16.5 billion additional revenue in 1991;

  • (4) a (one-time) tax on the notional capital gains recorded by enterprises on their “excess” inventories due to the planned increases in wholesale prices—expected to yield rub 9 billion;

  • (5) a 20 percent levy on funds set aside by enterprises for depreciation (rub 13 billion);

  • (6) the shifting to extrabudgetary funds of large items of expenditures: pensions (rub 125 billion); capital expenditures (which amounted to rub 42 billion in 1990); transfers to less developed regions of the country (rub 10 billion); and support to restructuring programs for public enterprises. These funds are to be financed by receipts from privatization of state properties, in addition to some of the revenues referred to in (1) and (5) above.6

(2) Monetary and financial policies

The presidential guidelines call for measures to address both the “stock problem” of excess liquidity of households and enterprises, and the “flow problem” of effectively moderating the future growth of the monetary and credit aggregates. To absorb enterprise liquidity, the authorities proposed in late 1990 a partial freeze of their deposits, which would eventually be converted into shares and distributed to workers. As regards household excess liquidity, several types of measures were envisaged to absorb it, including the sale of physical assets (such as dwellings and land plots, military equipment with civilian uses, and small businesses in the retail and services sectors) and financial assets with attractive returns, such as the warrants for consumer goods mentioned in Chapter II.2. In January 1991, however, the authorities took more drastic steps to absorb household liquidity, by limiting monthly withdrawals from bank deposits and by confiscating the bulk of higher denomination banknotes, estimated to account for a significant share of currency in circulation.7 Whether these measures will lead to a lasting reduction in excess demand, will depend, of course, on the stance of monetary and fiscal policies in the coming months.

The presidential guidelines call for a rise in interest rates to increase the attractiveness of bank deposits. Indeed, a first increase in these rates (up to 9 percent) was announced by Gosbank, effective November 1, 1990. There are suggestions in the guidelines that households might be compensated for losses of purchasing power of their deposits entailed by large increases in retail prices, through a revaluation of these deposits. Given the size of the latter (currently equivalent to about 35 percent of GDP), such a move would entail heavy costs either for the budget, the banks, or for borrowers from the banks to the extent that the cost of the revaluation was reflected in lending rates.

The presidential guidelines also refer to steps aimed at containing monetary growth in the near and longer term. No specific targets, however, have been announced to date for the growth of money and credit in 1991. These steps would include the elimination—except on a temporary basis under exceptional circumstances—of financing of budget deficits by Gosbank,8 and a more active use of indirect means of monetary control, including reserve requirements, refinancing policies and the establishment of at least non-negative levels of real interest rates.

Following a long debate, the Supreme Soviet approved in December 1990 a new central bank law which establishes a Union Reserve System consisting of the USSR Gosbank and republican central banks.9 The governing body of this system is envisaged to be a Central Council, consisting of 12 members: the President and the Vice President of Gosbank, appointed for six years by the Supreme Soviet, and 10 other members appointed by the President of the USSR on a rotation basis from the presidents of the republican central banks or other leaders of the republics. The Central Council will be responsible to the Supreme Soviet, and define and conduct monetary and credit policies for the whole union within the framework of guidelines approved each year by the Supreme Soviet. These guidelines will include limits on credit that can be extended by Gosbank and the republican central banks to finance the union and republics’ budgets, respectively. The Council will also define uniform union-wide rules (including prudential standards) for licensing and supervision of new banks, with a view to promoting competition within the banking system without loosening prudential control. The licensing of all union banks is to be the responsibility of the USSR Gosbank, while republican central banks would be empowered to license banks operating within the territory of the respective republics.

The new law envisages continued reliance on administrative mechanisms of monetary control, including credit ceilings and the regulation of bank interest rates and commissions, although reaffirming the reserve system’s powers to utilize mechanisms of indirect control, such as bank refinancing, reserve requirements, and purchases and sales of government securities.

(3) External policies10

While the presidential guidelines mention the objective of establishing ruble convertibility towards the end of the transition to a market economy, they do not spell out the steps for achieving it. They make passing references to the abolition of the DVK system, the establishment of a free exchange market and higher retention quotas. Several of these steps, however, have been subsequently enacted through presidential decrees. One of these decrees introduced a new commercial exchange rate, effective from November 1, 1990 and initially set at US$1 = rub 1.6611 —compared with the level of the official rate of around US$1 = rub 0.55. The new rate was chosen to ensure that, for 90 percent of exports, prices converted into domestic currency would at least equal present domestic wholesale prices. The commercial rate is to be applied to the bulk of current account transactions, in particular export proceeds subject to surrender, imports covered by the foreign exchange allocation plan and service of the foreign debt, and to inflows of financial loans. A special rate (equivalent to ten times the official rate) will remain in effect for tourist and other noncommercial current transactions.

The authorities also intend to create a free exchange market (possibly by expanding the scope of the existing auction market) in which exporters with surplus retained foreign exchange and importers without adequate foreign exchange allocations will be allowed to participate through the intermediation of banks and brokers. The existing provisions for foreign exchange retention have been modified by another presidential decree establishing a joint union-republic foreign exchange fund, to be fed with surrendered foreign earnings. This decree stipulates that 40 percent of all foreign exchange proceeds must be surrendered by exporters to the fund, for the service of the external debt of the union in 1991. New, generally higher, retention ratios would apply to the remaining 60 percent.12 Foreign exchange to be surrendered after application of the retention ratios is to be allocated between the joint union-republican and local foreign exchange funds in a ratio of 9:1. It is unclear at the present time whether the republics will agree to the sharing of foreign exchange in the proportions envisaged in the presidential decree. There are also no clear indications at present regarding the extent to which the authorities envisage intervening in the free market, and which institutions (e.g., the union and republican central banks or Vneshekonombank) would be carrying out such interventions.

c. Systemic and structural reforms13

(1) The role of central planning

The emphasis placed on stabilizing supply conditions in the first phase of the guidelines is reflected in a presidential decree requiring the maintenance of stable supply links through 1991, and the expectation that state orders will continue to play a major role, at least for one year.14 Gosplan has prepared directives for the sectoral ministries in the areas reserved to the union,15 as well as in other areas of crucial importance in the short run, such as the agro-industrial complex and the part of foreign trade to be carried out under intergovernmental agreements.

For the remaining areas, Gosplan undertook more of an advisory and forecasting role for 1991 than in previous years. It remains unclear to what extent central planning at the union level will be replaced by central planning at the republican level.

(2) Ownership relations

Although the presidential guidelines call for legislation to establish private property rights and to promote privatization of state property, they do not specify the form and timing of these actions. In agriculture, the guidelines advocate the co-existence of different forms of land ownership. The extent of, and timetable for, sale or distribution of land is, however, to be decided by each republic. Therefore, it is difficult to foresee to what extent, or how soon, private ownership might replace the traditional, and largely inefficient, state and collective farms.16 The guidelines also envisage extensive privatization of housing, but leave the definition of policies in this area to a future presidential decree, to be issued in the near future. Privatization is expected to proceed rapidly in the retail and services sector, and for small businesses in the industrial sector. For the larger industrial concerns, which account for a major share of industrial output, the guidelines envisage their transformation into joint stock companies and the eventual distribution or sale of their shares to private investors (with preference to be given to the workers in the firm). While no specific time horizon is indicated, the document suggests that the privatization process is likely to be stretched over a long period, in view of the large book value of state property.

(3) Market structure

The guidelines emphasize the need to promote competition, especially in areas such as agricultural procurement and processing. They call for the creation of anti-monopoly committees at various governmental levels, but do not specify their functions, powers, or timetables for action. Proposed antimonopoly policies center on the taxation of “excess profits” of firms deemed to be in a monopolistic position. By contrast, they make no mention of the potential roles for the dismantling of large industrial concerns and the elimination of product “profile restrictions,” or for import liberalization in promoting competition.

(4) Enterprise management

While the guidelines envisage the tightening of budget constraints on—and financial accountability of—state enterprises, they remain silent on such important issues as: the criteria for selecting managers of enterprises which would remain under state ownership or control and for assessing their performance; the prospective role of workers’ organizations in enterprise management; and the degree of autonomy that managers would be afforded in, inter alia, investment and employment decisions. For the near term, at least, the emphasis placed on maintaining existing economic links and on controls over prices and wages (see below) would appear to imply that enterprises’ autonomy will remain substantially constrained.

(5) Industrial restructuring and military conversion program

The presidential guidelines call for a major redirection of resources and investment towards industries producing consumer goods. It envisages that certain current investment projects in non-priority sectors may be reconverted if possible, or halted altogether, and unfinished construction sold off to the extent feasible. The restructuring effort is to be fostered through the tightening of budget constraints on enterprises, increases in interest rates on investment loans and the closing of nonviable firms (which the guidelines estimate to number several hundred). The program envisages the creation of special “stabilization funds” to provide temporary support during the restructuring period to loss-making firms deemed economically viable. It says little, however, about the criteria for distribution of these funds or the duration of the proposed support.

Although the presidential program does not provide details on military conversion plans, the authorities have indicated that the production of civilian goods by defense industries is targeted to increase by 30 percent over the period 1989-91. Accordingly, the share of civilian goods in the output of defense industries would rise by about 10 percentage points, to over 50 percent, from 1988 to 1991. The military conversion process is expected to be guided primarily by state orders, rather than by market instruments.

(6) Price reform17

In the price policy area, the presidential guidelines follow more closely the approach envisaged in the Abalkin program than in the Shatalin plan. Liberalization is to proceed cautiously at both the wholesale and the retail levels, while an attempt is to be made to correct administratively the largest distortions in relative prices. As regards wholesale prices, the authorities envisage two categories. One group (consisting of energy products, raw materials, and strategic intermediate goods) is to remain controlled, with prices set on the basis of a new list established by the central and regional price authorities.18 For other products, prices are to be set contractually between enterprises. However, it is also expected that these prices would be set on the basis either of guidelines prepared by the State Committee on Prices (Goskomtsen) or of cost developments plus a standardized markup. Preliminary indications suggest that administered wholesale prices would be increased at the beginning of 1991 on average by 50-60 percent, with some increases (e.g., for petroleum) ranging up to 130 percent. Agricultural procurement prices not already increased in 1990 were expected to rise on average by about 30 percent at the beginning of 1991.

As regards retail prices, 5-15 percent of these prices (mainly for “luxury goods”) were expected to be liberalized before the end of 1990. The debate on further reforms in this area in 1991 continued, with union authorities advocating modest further liberalization but an administrative pass-through to the retail level of most increases in wholesale and procurement prices. Others, in particular in some republics, supported rapid decontrol of most prices, with the exception of a few staple commodities which could be subject to rationing.

(7) Labor market, wages and social policies19

The presidential guidelines recognize that the necessary restructuring of industry is likely to entail losses of jobs in many state enterprises, which are currently substantially overmanned. They give no estimate, however, of either the scale of these losses or the scope for creation of new jobs in the emerging private sector activities. Estimates by government agencies of the foreseeable increase in unemployment range widely, from under 1 million to 4-6 million. The presidential program calls for measures—such as the creation of a state employment service—to facilitate retraining and the dissemination of information on available vacancies, for the provision by local authorities of public work opportunities to temporarily unemployed workers, and for the early introduction of an unemployment compensation scheme. While some details of this scheme—including notably the sources of its financing—were still under debate, the draft law provided for benefits broadly equivalent to 50 percent of the tariff wages of eligible displaced workers for a period of up to six months. Given the uncertainty about the prospective size and composition of unemployment, estimates of the respective costs of training, public works and unemployment compensation programs are also subject to wide variance.

The prospective role and instruments of incomes policy are not clearly set out in the presidential program. In order to promote greater productivity of labor, the guidelines call for freedom for enterprise managers to determine the form and level of individual workers’ compensation, subject only, during the transition period, to the minimum wage regulations for the relevant skill level. Minimum wage scales will be set nationwide, but it is envisaged that individual republics could set higher minimum wages for workers in their respective territories. The guidelines are unclear about the prospective role for government intervention in collective bargaining, in particular whether guidance would continue to be provided to enterprises on the growth of their overall wage bill, or of the average wage per worker, and what, if any, would be the penalties for “excessive” wage increases. The presidential document makes no reference to the “consumption fund” tax, which according to legislation passed in June 1990, is to replace the so-called Abalkin tax on wage increases in excess of government guidelines. It is anticipated, however, that this tax would be in effect at least until 1992.

The likely marked acceleration of retail prices in 1991 will pose difficult choices in economic and social policy, in particular as regards the degree of protection to be provided to various groups. Although the presidential guidelines do not fully clarify intentions in this area, they appear to envisage different degrees of compensation for different income groups. Accordingly, pensions and family allowances would be fully indexed, while the degree of indexation of wages would range up to 70 percent, declining for higher wage brackets—a feature which would tend ceteris paribus to compress differentials. Apparently, the index to be used for these adjustments would not be the overall price index but an index of prices for a “minimum consumer basket,” which would be calculated at the republican level (to allow for regional differences in living standards and consumption patterns) and would give heavy weight to the prices of subsidized commodities subject to rationing.

(8) Liberalization of foreign trade and investment20

The presidential program envisages further progress in eliminating the state monopoly on foreign trade, except for energy products, gold, diamonds, and a few high-technology goods. This will make the development of exports less predictable than they have been in a system dominated by state trade, e.g., with the CMEA countries.

The guidelines, though not specific, suggest that the authorities envisage relatively slow progress in trade liberalization, given in particular the balance of payments prospects (see section d). State orders for basic export goods will be maintained through 1992, and export quotas are likely to be maintained for some time. A new tariff has been prepared but it will continue to be supplemented by selective import and export taxes, in some instances with quite high rates.

Liberalization is likely to proceed much faster with respect to foreign investment. A recent presidential decree allows for the first time full foreign ownership. A draft foreign investment law is under preparation which, inter alia, is intended to protect foreign investors against future adverse changes in Soviet legislation, and would liberalize rules for the transfer abroad of profit and capital.

d. The macroeconomic outlook for 1991

The macroeconomic outlook for 1991 is clouded by greater than usual uncertainty regarding not only the external environment (in particular, the price of oil and the evolution of CMEA trade and financing) but also the domestic political and social context, as well as important aspects of economic and financial policies. The assumptions are made here that increased barriers would not arise to inter-republican trade and that a single currency would be maintained; also that arrangements for sharing of revenue and expenditure responsibilities and for financing budget deficits would eventually be agreed and be conducive to adequate budgetary discipline by sub-national governments.

As regards economic policies, it is assumed, on a general level, that the pace of systemic reforms would be relatively slow, but that efforts would be made to tighten financial policies and moderate wage pressures. Specifically, it is assumed that:

  • (a) a considerable share of production would continue to be governed by state orders, and existing trade links would also be largely maintained, as called for by the presidential decree of September 1990.

  • (b) administered wholesale prices would be increased as planned, and contractual prices would rise broadly in line with centrally established guidelines;

  • (c) retail prices would be adjusted upwards sufficiently to prevent a major loss of turnover tax revenue and to restrict the growth of subsidies;

  • (d) the growth of nominal wages would be moderated by allowing only partial indexation and by tightening enterprise liquidity. In these conditions, real wages might record a modest decline. However, overall money incomes of the population would rise in real terms, reflecting the projected improvements in pensions and other social benefits. It is further assumed that these benefits would be fully indexed to prices, in accordance with the presidential guidelines. This indexation, and the implementation of the proposed unemployment compensation scheme, would boost social expenditures well above budgeted levels. At the same time, however, the measures taken to confiscate part of household currency holdings and limit deposit withdrawals might reduce somewhat the pressure of existing household liquidity on the market for consumer goods;

  • (e) tax revenue would fall somewhat short, in relation to GDP, of the projection contained in the draft budget; thus the consolidated deficit of the state would exceed by a nonnegligible margin the preliminary projection of rub 59 billion;

  • (f) the tax measures and the partial freeze of enterprise deposits would absorb most excess liquidity in this sector. In addition, tight control would be kept on bank credit to enterprises, and interest rates would be raised significantly, albeit remaining negative in real terms. In reflection of this tightening of credit policy and of the steps taken to drain household liquidity, the overall ratio of money to GDP could, for the first time in years, decline significantly.

  • (g) the commercial exchange rate would be kept at its current level.

On balance, these policies would probably result in a net transfer of resources from enterprises to households. Accordingly, investment would continue to fall at a rapid rate, and some decumulation of inventories could be anticipated—unless supply uncertainties were exacerbated by political developments. On the other hand, private consumption might continue to rise, but its growth would be curbed by the tightening of liquidity. Although the intent of the presidential program is to restore order in the production and distribution systems, this could be expected to take some time. Meanwhile, shortages and disruptions in internal trade could increase. On the whole, net material product could fall by around 5 percent, with GDP declining by less. The behavior of retail prices would continue to be largely determined by administrative intervention, but there is likely to be a considerable acceleration of inflation in 1991.21

These relatively unfavorable prospects for the short-run, which—given the foreseeable slow pace of restructuring and lack of a major supply response—are unlikely to be significantly improved upon in subsequent years, raise serious concerns about the sustainability of the authorities’ overall reform strategy.

A plausible range of possible outcomes for the balance of payments in 1991 could be provided by two alternative scenarios (Table 5, Appendix II-3). In an optimistic one, oil prices would average US$26 per barrel and oil exports would decline by 17 percent. In a more pessimistic scenario, oil prices would decline to US$20 per barrel, and oil exports would fall by 25 percent. In both scenarios it is projected that the introduction of a depreciated commercial exchange rate, coupled with the abolition of the differentiated foreign exchange coefficients, would not strengthen competitiveness enough to prevent a fall in manufactured exports, particularly to the CMEA area. Imports would be constrained by foreign exchange availability, but would also be affected by the projected decline in investment. Accordingly, in both scenarios import volumes are assumed to fall by 7 percent on average, a decline which would still allow modest growth in imports of food and consumer durables. Under these assumptions, the current account deficit vis-à-vis the traditional convertible currency area (excluding gold exports) could range between US$10 billion and US$14½ billion. In addition, the Soviet authorities would face in 1991 large amortizations of medium- and long-term debt (amounting to about US$12 billion). Given already secured financing, amounting in all to US$17 billion, and assuming no further decline in foreign interbank deposits, the financing gap in convertible currencies would range between US$5½ billion and US$10 billion. Part of this gap, however, could be filled by the prospective current account surplus vis-à-vis the CMEA area (estimated at between US$10 billion and US$6½ billion under the two alternative scenarios), depending on the financing available to these countries, and on the disposition of the accumulated debts in transferable rubles of the USSR, which is now under discussion.

3. AN ASSESSMENT OF PROPOSED POLICIES AND REFORMS

a. The role of the republics in the implementation of reforms

The presidential guidelines envisage considerable freedom for the republics to choose the specific modalities and timing of reforms, in particular regarding the privatization process, land reform, price liberalization and/or adjustments—and consequently the evolution of commodity taxation and consumer subsidies—and the design of social safety nets. In addition, the republics would have responsibility for the provision of a substantial share of public goods and services, and for designing and administering an important portion of the tax system. In these circumstances, given the wide differences in demographic composition, political conditions, economic structure and living standards among the republics, and even within some of them, the pace of reform would probably tend to vary significantly across the country. Moreover, important differences would tend to emerge in the level and composition of taxation and public expenditures, including on consumer subsidies and social benefits.

The crucial question is the extent to which these divergent developments would be consistent with the maintenance of a unified economic space (i.e., the avoidance of a proliferation of new barriers to interrepublican trade and to labor and capital mobility across republican borders, and indeed the elimination of existing obstacles), as well as with a single currency within the union. This question requires first and foremost a political answer, which could be provided by a new union treaty, if it were to include a constitutional (and enforceable) commitment by the republics to refrain from the introduction of barriers to interrepublican trade and labor mobility. The effective maintenance of free flows of goods and factors of production would prevent the emergence of excessive differentials in their prices, and would also promote a degree of harmonization of taxation across the republics. Since, however, taxing capacities are likely to differ significantly (reflecting, in particular, different resource bases, levels of economic development and demographic structures), appropriate mechanisms for intergovernmental transfers would need to be devised and agreed among the union and the republics, to ensure adequate minimum levels of public services and social benefits, while preserving firm budgetary discipline at all levels of government.22

Such discipline would be essential to maintain unity of the currency. A single currency clearly requires central management of the monetary and credit aggregates. The new central bank law attempts to provide an institutional framework for a unified conduct of monetary policy, but leaves open a number of operational issues which could affect importantly the consistency of credit policies at the republican and local levels. Moreover, it remains unclear to what extent the accountability of the new Union Reserve System to a political authority (the Supreme Soviet) and the role envisaged for the latter in the definition of monetary and credit policies—including limits on central bank financing of the union and republics’ budgets—will be conducive to adequate monetary and financial discipline. In this respect, it would be preferable to ban altogether financing of the budget deficits of the union and subnational governments by the respective central banks and to rely on rules,23 rather than discretion, in the setting of annual limits on borrowing by the various levels of government from commercial banks.

The proposed creation of a joint union-republic foreign exchange fund, which would be a separate body fully independent of Gosbank, raises concerns not only about an orderly servicing of the external debt of the country, but also as regards the unified management of the foreign exchange reserves and the commercial exchange rate. It also leaves open important operational issues regarding, in particular, procedures for decision making within the ruling council of this fund.24 In principle, given the close interrelation of monetary and exchange rate policies—which should be defined and implemented in a consistent and mutually reinforcing manner—it would seem appropriate to entrust the management of the foreign exchange fund to the Central Council of the newly created Union Reserve System, in which both union and republican authorities are represented.25

The joint union-republic foreign exchange fund is also to service the external debt outstanding of the union as well as debt incurred in the future for all-union projects. Foreign debt incurred by individual republics (possibly against collateral of their foreign exchange earning assets) will be serviced by them. The resulting foreseeable loss of central control over external indebtedness is a cause for concern. It would also seem important that, with the further planned decentralization of foreign trade activities, an effective mechanism be put in place as soon as possible to monitor and control external financing obtained by enterprises engaged in foreign trade.

b. Some observations on the authorities’ reform strategy

(1) Systemic reforms

This brief review of the presidential guidelines, and of the policies announced so far for 1991, suggests that the pace of transition to a market economy envisaged by the Soviet authorities is a gradual one, and that emphasis will be placed in the near future on stabilizing economic conditions, beginning to correct some major relative price distortions and financial imbalances, and striving to shelter socially (and politically) sensitive segments of the population from the impact of the adjustment. It would seem likely that:

  • (a) production carried out under state orders will continue to account for a large share (albeit varying by sectors) of enterprise output. This will not promote enterprise autonomy nor a reallocation of resources toward more productive uses; it may also hinder sustained progress in the reconversion of military industries to the production of civilian goods;

  • (b) similarly, the injunction to companies to maintain stable supply links, albeit understandable as a short-run response to disintegrating economic structures, will not foster the necessary shifts in internal trade flows, nor promote managerial initiative in seeking out more profitable business opportunities. The extent to which the injunction can be effectively enforced remains, in any event, unclear;

  • (c) the envisaged reliance on ceilings on profit margins, and on a heavy taxation of “excess profits,” as antimonopoly devices, in lieu of steps to promote internal and external competition, will not provide incentives to enterprises to increase productivity and contain costs, and will tend to perpetuate existing monopoly positions;

  • (d) the proposed maintenance of extensive controls on wholesale prices will not foster managerial autonomy and responsibility in the state enterprises, which, given the foreseeable slow pace of privatization, will continue to account for the preponderant share of output, especially in industry. A substantial degree of freedom from government intervention in the pricing of inputs and outputs would be a necessary, though not sufficient, condition for the imposition of an effective budget constraint on state enterprises;

  • (e) a slow pace of decontrol of retail prices would hinder not only budgetary discipline but also the rapid elimination of shortages of consumer goods and queuing.

(2) Fiscal policy

The 1991 budget highlights some of the most difficult tradeoffs facing economic policy makers in the USSR today. In particular, it shows the difficulty of securing a fundamental improvement in the public sector finances without reducing price subsidies, moderating the growth of social benefits and carrying out a major reform of indirect taxation. In the absence of progress on all these fronts, it is not surprising that: (a) the forecast deficit of the draft state budget for 1991 was virtually double the level targeted in the presidential guidelines; (b) the deficit may only be contained to this (higher) level through measures which are partly of a temporary and somewhat “cosmetic” nature; and (c) there are serious risks that the actual deficit may significantly exceed the forecast level.

A more sustainable improvement in the budgetary position for 1991 could be achieved through a comprehensive alternative package of measures. Specifically:

  • (a) existing turnover taxes should be quickly replaced with fixed rate ad valorem taxes, implying a full pass-through to the retail level of any increase in wholesale prices of taxed commodities. In the process, it would be most desirable to improve the turnover tax further by streamlining its rate structure and broadening its base, inter alia to include imports, and to complement it with excise duties on, for example, alcohol, petroleum products, tobacco and luxury goods. In addition to yielding additional revenue in the short run, these reforms would lay the foundation for the introduction of a value-added tax within two or three years;

  • (b) price subsidies, which were projected to nearly double in 1991, should instead be significantly reduced from their 1990 level, for example by allowing prices to rise and limiting the quantity of subsidized commodities;

  • (c) the proposed levy on enterprise depreciation charges could be replaced with a uniform mandatory dividend payout (a percentage of after-tax profits) for state enterprises, which would be in line with a policy of placing state and private enterprises on a more equal footing;

  • (d) existing tax preferences and exemptions should be further reduced;

  • (e) sharper cutbacks should be made in lower priority expenditures, including subsidies to loss-making enterprises, defense outlays (which, even at the probably understated level of about 7 percent of GDP, absorb a higher share of resources than in most countries), and expenditures on personnel and administration; and

  • (f) adequate financing should be secured for the proposed new unemployment compensation scheme.

In a longer term perspective, wide-ranging further reforms in the tax system, tax administration, the structure of expenditures, and budgeting and expenditure control procedures will be needed to complement and support the overall reform process in the economy.26

(3) Monetary policy

The authorities have recently announced measures to absorb or tie up existing excess liquidity in the economy. As regards enterprise liquidity, the proposed conversion of a part of enterprise deposits into shares to be distributed to workers by boosting household wealth might add to excess demand for consumption goods in the short run. It would also tend to give an excessive weight to workers’ ownership, thereby hindering the efficient management of enterprises. The steps taken to confiscate or freeze household liquidity may have some dampening effect on inflationary pressures in the short run, but they also threaten to further undermine confidence in the currency and popular support for the reform effort. It would be preferable to concentrate instead on sales of government property and financial assets, as proposed in the presidential guidelines. Since these sales might not materialize in the short term at a scale sufficient to absorb a substantial part of the “monetary overhang,”27 it might be useful to supplement them with offers to the public of relatively short-term (2-3 years) bonds with indexed principal to be used at maturity (or even earlier, at the option of the holder) to buy public assets (including shares of enterprises to be privatized) or as downpayment for the purchase of housing.

In addition to asset sales, a more appropriate level of interest rates could play an important role in promoting the voluntary holding of financial assets (as well as a more efficient allocation of credit). The initial steps taken recently by the authorities in this direction are to be welcomed. It is clear, however, that the current level of interest rates remains well below the foreseeable rate of inflation in 1991. It would be important that, as prices are liberalized, interest rates be moved rapidly to a level that provides the prospect of a positive real return on financial assets, and that they be adjusted flexibly thereafter. Although a full liberalization of interest rates should probably await the development of a competitive banking system, steps could begin to be taken in that direction, for example, by limiting direct intervention by the monetary authorities on deposits and lending rates to the setting of a floor and a ceiling, respectively. Adequate flexibility in the conduct of interest rate policy would be essential to support the planned gradual shift towards indirect instruments of monetary control. In the near term, however, the authorities will probably need to continue to rely on quantitative limits to the growth of bank credit. The implementation of effective controls in the context of a more decentralized and competitive banking system will require significant and timely adaptations in the operations of the central bank.

(4) Incomes policy28

In a context of reduced direct government intermediation in the wage determination process, as envisaged in the presidential guidelines, an effective tightening of monetary policy would be an important indirect instrument in promoting wage moderation. In the near term, however—as financial discipline on enterprises is progressively tightened and trade unions develop a role more in line with western models—it seems desirable that the authorities continue to provide close guidance to the collective bargaining process, supported by nondiscriminatory and firmly enforced taxation of wage increases in excess of the guidelines. The proposed indexation of wages may well be necessary to secure social acceptability of a rapid price reform. It must be recognized, however, that it introduces an element of rigidity in the wage determination process which is undesirable from a purely economic perspective. To moderate its inflationary potential, it is essential that the degree of indexation be kept relatively low. As the experiences of several other countries show, it would be preferable to replace indexation to past price increases with a mechanism linking wages to a (realistic and credible) target for inflation.

(5) External policies

The recent introduction of a commercial exchange rate, substantially depreciated in comparison to the official exchange rate, and the elimination of the differentiated foreign exchange coefficients, represent steps in the direction of a more realistic and less discriminatory exchange rate policy. The present narrowness of the auction market implies, however, that the gap between rates prevailing in this market and the commercial rate is likely to remain large for the foreseeable future, fostering “leakages” between the two markets. More importantly, if the auction market remains thin, the authorities will continue to lack adequate guidance from market forces as to the appropriate level of the exchange rate. It would therefore appear important to move quickly towards unification of the rates in the two markets by reducing progressively the share of export proceeds to be surrendered at the commercial exchange rate,29 by requiring exporters to promptly sell in the free foreign exchange market retained export earnings which are not used for imports, and by increasing rapidly the share of imports channeled through this market. It would also be important quickly to establish adequate arbitrage facilities between regional foreign exchange markets, to avoid the emergence of multiple exchange rates in these markets.

A more difficult question—and one that would best be answered in the light of the overall policy stance and conditions of the economy at the time of unification of the exchange rate—is whether the rate should then be allowed to float, at least for some time, or whether an attempt should be made to stabilize it at a particular level, presumably somewhat undervalued at the start. The latter alternative would have the advantage of providing a nominal policy “anchor” and would tend, therefore, to moderate inflationary expectations, provided that it was supported with appropriately tight financial policies and adequate foreign exchange reserves (or lines of credit). By contrast, floating would provide greater flexibility in the management of other policies and, at least in the short run, better safeguard the balance of payments, albeit probably at the cost of higher inflation.30

The proposed liberalization of foreign investment is generally to be welcomed. However, the extent to which it will ultimately benefit the Soviet economy will depend on the speed with which distortions between domestic and world prices are eliminated. So long as those distortions remain, free access to inward direct investment could leave the USSR worse off than before, as foreign investors capture and repatriate the implicit economic rents. Ideally, therefore, price and trade liberalization should proceed at least as quickly as the liberalization of foreign investment.

NOTES

Following the reforms of the government structure at the special conference of the Communist Party of the Soviet Union in mid-1988, the supreme organ of power in the USSR is the 2,250 member Congress of People’s Deputies (CPD) which was first elected by popular vote in March 1989. The CPD meets at least twice a year, and elects, from its ranks, the 542 member bicameral Supreme Soviet, which functions as the USSR’s full time working legislature. The Supreme Soviet passes laws, ratifies international treaties, and approves economic plans and the union budget. It must also ratify all appointments (including that of the Prime Minister) to the Council of Ministers, the body in charge of the vast Soviet bureaucracy as of late 1990. Symmetrically, each republic has its own Supreme Soviet and Council of Ministers (only the Russian Republic has a congress of people’s deputies as well). There are also local soviets at the regional, city and district levels.

In March 1990, a new post, Executive President of the USSR, was created by the CPD. The President has the right to declare a state of emergency (subject to a two-thirds approval of the Supreme Soviet), and to nominate the Prime Minister. He can veto legislation proposed by the Supreme Soviet (although this can be overridden by a two-thirds vote of the Supreme Soviet), and can issue binding decrees that do not require the Supreme Soviet’s approval. The President is advised by a Presidential Council (which he appoints) the role of which appears to include many functions previously undertaken by the Politburo of the Communist Party. The President is also assisted in policy making by the Federation Council, on which sit representatives of the republic governments. The executive powers of the Council were to be substantially strengthened in late 1990.

The September program of the Government had been preceded by previous versions more or less publicly debated since the latter part of 1989.

The name refers to the then Deputy Prime Minister for economic reforms, Academician Abalkin.

It is not clear whether the target was actually intended to be set as an absolute amount or in relation to GDP, in which case its nominal equivalent could exceed significantly the rub 25-30 billion range.

For a description and analysis of these reforms, see Chapter III.1.

Specifically, 11 percentage points of the combined payroll tax of 37 percent were designated as revenue for the “stabilization” (restructuring) funds.

The confiscation of higher denomination banknotes reportedly only led to a fairly negligible decline in currency in circulation within the USSR, however, as holders of most of these banknotes were permitted to exchange them for lower denomination bills.

It is envisaged, however, that the deficits could be financed through recourse to the Savings Bank, which is to remain under state control, although such borrowing would take place at market rates.

Chapter III.2 provides a more detailed analysis of the law.

For further details, see Chapters III.4 and IV.3.

The commercial rate will be pegged to the same basket of six currencies as the official rate (which remains in effect for ruble-denominated claims of the USSR on developing countries). Thus, the commercial rate will fluctuate weekly vis-à-vis the U.S. dollar, reflecting changes in the rate of the latter vis-à-vis the other currencies in the basket.

These areas are covered in greater detail in Part IV and Chapter V.8.

The draft plan for 1991 provided that over 95 percent of petroleum, 70-90 percent of various petroleum products, and some two-thirds of coal would be delivered under state orders. The role of state orders in most other areas, however, was expected to be considerably lower.

The guidelines propose that responsibility for the following areas of economic activity be delegated by the republics to the union: basic research and technological development; national defense; the fuel and energy systems; major transportation systems; and the union emergency response system. The union’s jurisdiction over some of these areas (e.g., energy) is still contested by certain republics and autonomous regions.

The program stresses, however, the need for interrepublican agreements to secure the free flow of agricultural commodities among republics, and calls for the retention of the All-Union Fund—to be now managed jointly by the union and the republics—with pre-established contributions of each republic, to ensure minimum supplies of basic food products and agricultural raw materials.

The subject of price reform is covered in more detail in Chapter IV.1.

For 1991 many of these prices will in fact be set by Presidential decree, under the emergency powers granted by the Supreme Soviet.

These issues are covered in detail in Chapter IV.6.

These issues are covered in detail in Chapter IV.3.

Prior to the January measures taken to reduce liquidity, it was considered that the rate of recorded retail inflation could well exceed 40 percent. At this time, it is difficult to assess the impact of these measures on the rate of either underlying or open inflation in 1991, due to the uncertainties regarding, respectively, the stance of monetary and fiscal policies, and the policy with respect to administered price increases.

For a fuller discussion of intergovernmental fiscal relations see Chapter III.1.

For example, it could be stipulated that bank financing for each budget could not exceed a certain proportion of its revenues.

These are to be defined in implementing guidelines to be issued by the Council of Ministers of the USSR.

For a further discussion of these issues see Chapter III.2.

These reforms are discussed in some detail in Chapter III.1.

See Chapter III.3 for an econometric analysis of the “monetary overhang” in the household and enterprise sectors.

See Chapter IV.6 for a more detailed discussion.

The large gain that would thus accrue, for example, to exporters of oil and other natural resources could be subjected to a high export tax, shared between the union and the republics.

For a further discussion of considerations affecting the choice of exchange rate policy, see Chapter III.2.

Appendix II-1 Statistical Tables on Macroeconomic Activity

This appendix contains statistical tables regarding the following areas of macroeconomic activity: (A) aggregate output and expenditure; (B) sectoral output; (C) fixed investment and stockbuilding; (D) incomes and sources and uses of funds; (E) prices, wages, and labor productivity; (F) the labor force and employment; (G) foreign trade; (H) the balance of payments; (I) external claims and debt; (J) the fiscal accounts; and (K) money and credit. These tables serve as background mainly for Part II, but also to some extent for other chapters of this study.

Table A.1.USSR: Sources of Economic Growth, 1961-90(Average annual growth rate, in percent)
Employment 2Gross Fixed

Capital Stock 4
Gross

Barter

Terms of

Trade 5
Net

Material

Product 1
TotalMaterial

Sphere 3
TotalProductive

Capital Stock
1961-656.50.4 68.59.6-3.0
1966-707.81.0 67.58.1-3.0
1971-755.61.1 67.98.75.2
1976-804.31.41.06.87.40.6
1981-853.20.70.56.06.44.0
1986-892.70.4-0.14.84.7-2.4
19862.30.60.15.35.2-14.5
19871.60.44.94.8-4.9
19884.40.1-0.44.74.4-1.0
19892.50.5-0.14.44.26.9
1990 (first nine months)-2.5 7-0.8 8

In comparable prices; sources are Narodnoe khoziaistvo SSSR za 70 let (1987), p. 51 for 1961-70, and Goskomstat for 1971-89.

Source is Goskomstat.

Includes some employment in the transport and communications sector that is not included in the material sphere.

“Basic funds,” including changes in livestock, without taking into account wear and tear, valued in 1973 comparable prices according to published Soviet statistics. Sources are Narodnoe khoziaistvo SSSR za 70 let (1987), p. 51 through 1985; Narkhoz 1988 (1989), p. 259 for 1986-89; and Osnovnye pokazateli (1990), p. 49, for 1989.

Table G.4.

Derived from Narodnoe khoziaistvo SSSR za 70 let (1987), p. 51.

Source is Sotsial’no — ekonomischeskoe razvitie (1990).

Goskomstat estimate.

In comparable prices; sources are Narodnoe khoziaistvo SSSR za 70 let (1987), p. 51 for 1961-70, and Goskomstat for 1971-89.

Source is Goskomstat.

Includes some employment in the transport and communications sector that is not included in the material sphere.

“Basic funds,” including changes in livestock, without taking into account wear and tear, valued in 1973 comparable prices according to published Soviet statistics. Sources are Narodnoe khoziaistvo SSSR za 70 let (1987), p. 51 through 1985; Narkhoz 1988 (1989), p. 259 for 1986-89; and Osnovnye pokazateli (1990), p. 49, for 1989.

Table G.4.

Derived from Narodnoe khoziaistvo SSSR za 70 let (1987), p. 51.

Source is Sotsial’no — ekonomischeskoe razvitie (1990).

Goskomstat estimate.

Table A.2.USSR: Net Material Product and National Income Utilized, 1970-89(In billions of rubles, current prices)
NMP 1

(1)
Adjusted Valuta

Trade Balance 2

(2)
Losses 3

(3)
National Income

Utilized 1

(1)-(2)-(3)

(4)
1970289.92.22.2285.5
1975363.3-3.03.3363.0
1980462.23.74.4454.1
1981486.73.25.6477.9
1982523.95.15.9512.9
1983548.35.56.4536.4
1984570.56.45.1559.0
1985578.53.16.7568.7
1986587.43.38.1576.0
1987599.64.98.9585.8
1988630.81.410.3619.1
1989673.7-2.310.0666.0

Source is Goskomstat.

Equal to Bt’αx when Bt’>0 and Bt’αm, when Bt’<0, where αx and αm refer respectively to the implicit internal exchange rate for exports and imports, respectively, and Bt’ denotes the valuta trade balance. Source is Goskomstat. See Appendix II-2 for further details.

Residual.

Source is Goskomstat.

Equal to Bt’αx when Bt’>0 and Bt’αm, when Bt’<0, where αx and αm refer respectively to the implicit internal exchange rate for exports and imports, respectively, and Bt’ denotes the valuta trade balance. Source is Goskomstat. See Appendix II-2 for further details.

Residual.

Table A.3.USSR: Value Added in Foreign Trade, 1970-1989(In current prices)
Adjusted Valuta

Trade Balance 1

(1)
Trade Balance in

Domestic Prices2

(2)
Value Added in

Foreign Trade3

(1)-(2)
Valued Added in

Foreign Trade as

Percent of NMP
19702.2-8.610.83.7
1975-3.0-22.119.15.3
19803.7-40.744.49.6
19813.2-47.750.910.5
19825.1-49.654.710.4
19835.5-52.057.510.5
19846.4-52.959.310.4
19853.1-60.663.711.0
19863.3-55.458.710.0
19874.9-50.455.39.2
19881.4-50.451.88.2
1989-2.3-59.557.28.5

Column (2) of Table A.2.

Source is Goskomstat.

Equal to (Bt’αx-Bt) when Bt’>0 and (Bt’αm-Bt), when Bt’<0, where αx and αm refer respectively to the implicit internal exchange rate for exports and imports, respectively, and Bt’ and Bt denotes the valuta trade balance evaluated in domestic prices, respectively. See Appendix II-2 for further details.

Column (2) of Table A.2.

Source is Goskomstat.

Equal to (Bt’αx-Bt) when Bt’>0 and (Bt’αm-Bt), when Bt’<0, where αx and αm refer respectively to the implicit internal exchange rate for exports and imports, respectively, and Bt’ and Bt denotes the valuta trade balance evaluated in domestic prices, respectively. See Appendix II-2 for further details.

Table A.4.USSR: Growth in NMP by Sector of Origin, 1971-89(In percent)
Real Rates of Growth (In Comparable Prices)Share of

of 1989

total output

(in current

prices)
1981-851986-891986198719881989
Total3.22.72.31.64.42.5100.0
Industry2.93.30.63.66.13.141.9
(excluding turnover taxes)(3.9)(4.2)(5.5)(4.6)(6.3)(0.4)(40.4)
Agriculture1.02.47.1-1.42.51.723.4
Construction3.26.612.15.57.61.612.8
Transport and communication2.90.84.20.35.8-6.55.6
Transport2.80.44.1-0.15.7-7.45.3
Communication5.87.66.28.38.08.00.3
Trade, procurement, and supply2.43.31.2-0.54.68.26.5
Trade2.53.40.2-2.67.78.65.0
Agricultural procurement0.77.84.96.26.713.50.6
Material-technical supply3.20.43.75.4-9.52.90.9
Data processing3.622.03.015.913.563.70.2
Forestry1.93.80.70.92.112.00.1
Other branches0.17.60.35.222.83.50.9
Receipts from foreign trade9.5-4.2-8.8-4.7-6.63.88.5
Source: Goskomstat.
Source: Goskomstat.
Table A.5.USSR: Distribution of NMP by Sector, 1 1970-89(In percent of NMP; in current prices)
19701975198019851989
Industry51.252.651.545.541.9
Agriculture21.816.914.919.523.4
Construction10.311.410.310.812.8
Transport and communications5.66.35.86.15.6
Trade, procurement and supply6.26.57.06.36.5
Others1.21.00.90.81.3
Foreign trade3.75.39.611.08.5
100.0100.0100.0100.0100.0

Including turnover taxes: source is Osnovnye pokazateli (1990), p. 22, and Goskomstat for all years except 1989, in which only the latter source is used.

Including turnover taxes: source is Osnovnye pokazateli (1990), p. 22, and Goskomstat for all years except 1989, in which only the latter source is used.

Table A.6.USSR: Growth in NMP by Expenditure Category, 1971-89 1(Percentage change in comparable prices)
1976-801981-851986-891986198719881989
Domestic expenditure3.82.92.61.60.74.63.4
Consumption4.43.24.13.53.54.25.1
Private(4.2)(2.9)(3.4)(1.9)(2.7)(3.9)(5.3)
Public(5.9)(4.9)(5.4)(4.0)(7.7)(5.9)(4.0)
Accumulation2.32.80.63.0-4.25.6-1.6
Net fixed investment(2.6)(-1.7)(-1.1)(4.9)(5.7)(-7.4)(-6.7)
Stockbuilding and other (est. 1) 2(0.2)(0.9)(0.3)(0.1)(-1.9)(2.5)(0.6)
(est. 2) 3(…)(…)(…)(-0.8)(-1.6)(1.7)(-0.5)
Change in merchandise trade balance 42.00.6-0.6-0.7

Source for most items is Goskomstat.

Contribution to growth rate of NMP, in percentage points. Estimate calculated using official growth rates for accumulation and net fixed investment and the previous year’s weight of net fixed investment—in current prices—in accumulation.

Contribution to growth rate of NMP, in percentage points. Estimate based on Osnovnye pokazateli (1990), pp. 19, 20 and 113 using the implicit NMP price deflator.

Contribution to growth rate of NMP, in percentage points. Estimate based on Osnovnye pokazateli (1990), p. 19 and Vneshnie ekonomicheskie sviazi (1990), p. 6., and use of trade volume indices from various issues of Vneshniaia torgovlia and from Vneshnie ekonomicheskie sviazi (1990), p. 18. The special conversion coefficient, discussed in Appendix II-2, is not applied.

Source for most items is Goskomstat.

Contribution to growth rate of NMP, in percentage points. Estimate calculated using official growth rates for accumulation and net fixed investment and the previous year’s weight of net fixed investment—in current prices—in accumulation.

Contribution to growth rate of NMP, in percentage points. Estimate based on Osnovnye pokazateli (1990), pp. 19, 20 and 113 using the implicit NMP price deflator.

Contribution to growth rate of NMP, in percentage points. Estimate based on Osnovnye pokazateli (1990), p. 19 and Vneshnie ekonomicheskie sviazi (1990), p. 6., and use of trade volume indices from various issues of Vneshniaia torgovlia and from Vneshnie ekonomicheskie sviazi (1990), p. 18. The special conversion coefficient, discussed in Appendix II-2, is not applied.

Table A.7.USSR: Components of Domestic Expenditure (National Income Utilized)(Percent share; in current prices)
Accumulation Fund
Consumption FundNet fixed

productive

investment 1
Net fixed

unproductive

investment
Change in “material

circulating means”

and reserves
PersonalOther
197062.38.211.36.611.6
197563.79.711.26.09.4
198065.610.510.05.38.6
198165.910.58.75.19.8
198263.410.49.14.512.6
198362.710.68.55.313.0
198462.310.68.75.812.8
198562.810.88.16.012.3
198663.111.18.76.410.7
198763.811.69.26.98.5
198863.511.77.47.110.3
198965.111.85.96.410.8
Source: Osnovnye pokazateli (1990), pp. 112, 114-115; 1989 figures are subject to revision.

“Accumulation of basic funds.” Includes changes in livestock herds.

Source: Osnovnye pokazateli (1990), pp. 112, 114-115; 1989 figures are subject to revision.

“Accumulation of basic funds.” Includes changes in livestock herds.

Table A.8.USSR: Material Intensity of Gross Output, 1970-88 1
Including DepreciationExcluding Depreciation
(1970 = 100)
1975105.5103.4
1980104.0100.2
1985106.0100.6
1988106.7100.0
1989105.0 2
(Previous year = 100)
1986100.7100.2
1987100.7100.1
198899.499.1

Index of ratio of material costs per unit of gross output, measured in current prices. Source: Osnovnye pokazateli (1990), pp. 74-75.

Source is Goskomstat (provisional).

Index of ratio of material costs per unit of gross output, measured in current prices. Source: Osnovnye pokazateli (1990), pp. 74-75.

Source is Goskomstat (provisional).

Table B.1.USSR: Growth in Gross Value of Industrial Output, 1971-89(Percentage change, in comparable prices)
1981-851986-8919861987198819891989

Output

Shares as

Percent of

the Total
Total3.63.44.43.83.91.7100.0
of which:
Electricity3.72.73.14.81.91.13.5
Fuel industry1.21.43.71.91.7-1.56.8
Ferrous metals2.02.34.42.03.05.7
Nonferrous metals2.12.53.52.23.20.93.8
Chemicals5.04.06.04.54.60.96.8
Machinery6.25.17.15.65.32.528.1
Forest and paper products3.53.35.12.54.41.44.6
Construction materials2.93.95.33.54.52.13.8
Light industry1.52.31.71.33.62.513.8
Food products2.73.41.84.33.44.215.2
Source: Goskomstat.
Source: Goskomstat.
Table B.2.USSR: Industrial Value Added by Main Branch, 1980-89

(Share in percent, in current prices) 1

198019851989
Electrical energy3.84.53.8
Fuels7.89.18.1
Metallurgy8.49.59.2
Machinebuilding and metalworking39.137.839.0
Chemicals and petrochemicals8.16.67.1
Forestry, woodworking and paper5.66.46.6
Construction materials4.24.74.9
Light industry11.511.111.9
Food industry11.610.49.4
100.0100.0100.0
Source: Goskomstat.

Excluding turnover taxes.

Source: Goskomstat.

Excluding turnover taxes.

Table B.3.USSR: Production of Major Energy Products, 1960-89
19601970198019851986198719881989(First

nine

months)

1990
Crude petroleum 1
(millions of tons)148353603595615624624607433
Natural gas
(billions of cubic meters)45198435643686727770796528
Coal
(millions of tons)510624716726751760772740602
Electricity
(billions of kilowatts)2927411,2941,5441,5991,6651,7051,722
Sources: 1960 and 1970: Narodnoe khoziaistvo SSSR za 70 let (1987), pp. 162-63; 1980-89: Narkhoz 1989 (1990), pp. 375 and 377; 1990 (first nine months): Sotsial’ no ekonomicheskoe razvitie (1990), p. 21.

Including gas condensate.

Sources: 1960 and 1970: Narodnoe khoziaistvo SSSR za 70 let (1987), pp. 162-63; 1980-89: Narkhoz 1989 (1990), pp. 375 and 377; 1990 (first nine months): Sotsial’ no ekonomicheskoe razvitie (1990), p. 21.

Including gas condensate.

Table B.4.USSR: Growth in Agricultural Production, 1981-89
Annual Percentage Rates of Growth, in Constant PricesShare of

1989 Gross

Value of

Output 1
1981-851986-8919851986198719881989
Gross value of agricultural output
(in comparable prices)2.11.90.15.3-0.61.71.3
Output (in physical volume):
Grain 20.32.411.88.3-0.1-7.09.210.8
Meat 32.54.10.65.35.04.22.031.1
Milk1.62.40.73.71.62.91.619.1
Eggs-0.10.8-2.7-0.91.42.83.6
Potatoes1.7-0.3-14.619.5-13.0-17.415.26.1
Vegetables0.60.5-10.85.7-1.70.3-2.03.8
Fruit – including grapes2.3-2.7-10.810.9-21.34.2-1.32.8
Sugar beets0.34.3-3.5-3.814.4-3.010.72.2
Cotton lint0.6-1.17.1-4.4-5.99.8-3.13.2
Wool0.21.8-4.05.0-1.63.60.31.8
Other15.5
Source: SSSR v tsifrakh (1989), p. 223, Goskomstat, and U.S. Department of Agriculture (for cotton lint).

Gross value of output shares are calculated from data in 1983 comparable prices.

Grain output statistics here are not traditional “bunker weight” figures, but reportedly exclude dirt, moisture, and other foreign matter.

Meat’s share of gross value of agricultural output for 1989 includes the output value of cattle and poultry raising.

Source: SSSR v tsifrakh (1989), p. 223, Goskomstat, and U.S. Department of Agriculture (for cotton lint).

Gross value of output shares are calculated from data in 1983 comparable prices.

Grain output statistics here are not traditional “bunker weight” figures, but reportedly exclude dirt, moisture, and other foreign matter.

Meat’s share of gross value of agricultural output for 1989 includes the output value of cattle and poultry raising.

Table C.1.USSR: Growth of Net and Gross Fixed Investment, 1971-89(Average annual growth rate in comparable prices; in percent)
Gross Fixed Investment 1
TotalMaterial

sphere
Net

Fixed

Investment 2
1971-756.88.15.2 3
1976-803.33.52.6
1981-853.53.1-1.7
1986-896.25.6-1.1
19868.47.44.9
19875.64.25.7
19886.26.2-7.4
19894.74.7-6.7

Refers to investment in the total economy; source is Goskomstat.

Source is Goskomstat.

Average for 1973-75 only.

Refers to investment in the total economy; source is Goskomstat.

Source is Goskomstat.

Average for 1973-75 only.

Table C.2.USSR: Growth of Fixed Investment by Sector and Branch, 1971-1989(Average annual growth rate in comparable prices; in percent)
1971-751976-801981-851986-8919851986198719881989
Total6.83.33.56.23.08.45.66.24.7
Industry6.53.44.27.04.48.45.75.97.8
Electricity3.63.95.10.712.40.12.13.0-0.3
Coal2.43.93.66.92.46.810.710.8-0.2
Oil8.712.28.88.211.310.614.43.54.5
Gas11.62.912.518.815.814.48.710.045.6
Metallurgy5.62.23.2-7.014.79.8-11.62.0
Chemicals9.5-0.2-0.2-0.98.50.63.30.7-1.4
Machinery9.44.04.05.04.512.40.99.2-1.8
Forest and paper products4.4-0.21.66.65.610.9-1.43.713.9
Construction materials1.6-0.21.89.97.8-2.821.612.310.0
Light industry5.02.62.07.7-5.04.3-11.517.923.6
Food products4.91.81.912.0-1.45.33.521.219.2
Other5.1-1.64.512.48.04.99.17.129.9
Agriculture10.32.71.15.11.36.52.46.35.2
Transport10.04.93.8-1.5-2.33.54.44.6-16.6
Rail5.65.81.53.2-0.15.66.51.40.4
Other11.84.54.6-3.1-3.02.83.85.7-21.8
Communication6.03.45.010.86.815.311.06.610.7
Construction7.74.50.414.95.011.61.819.028.8
Trade and related supply3.46.34.3-0.56.711.3-9.6-0.4-2.2
Data processing-34.173.6
Forestry2.33.26.1-16.04.6-5.6-8.16.995.3
Semi-processed goods8.9-6.1-2.5-1.2-12.514.3-16.6-1.21.2
Housing4.01.95.97.62.99.98.76.25.8
Utilities and other 13.93.33.18.05.511.510.66.33.7
Source: Goskomstat.

Includes municipal services, public health, education, science, culture and art.

Source: Goskomstat.

Includes municipal services, public health, education, science, culture and art.

Table C.3.USSR: Gross Fixed Investment by Sector and Branch, 1971-89(Percent of total, in comparable prices)
1971-75 11976-80 21981-851986-891986198719881989
Total100.0100.0100.0100.0100.0100.0100.0100.0
Industry35.235.235.636.836.536.536.437.5
Electricity3.63.43.43.23.43.33.23.0
Coal1.71.61.61.71.61.71.71.7
Oil3.24.26.06.96.67.16.96.9
Gas1.41.51.92.82.42.52.63.6
Metallurgy4.24.03.63.23.53.63.02.9
Chemicals3.23.12.72.12.32.12.01.9
Machinery8.08.58.78.99.28.89.08.5
Forest and paper products1.61.41.21.21.21.11.11.2
Construction materials1.91.51.31.41.21.31.41.5
Light industry1.41.31.31.11.21.01.11.3
Food products2.62.42.22.32.12.02.32.6
Other2.52.11.92.11.92.02.02.4
Agriculture19.020.018.516.917.216.716.716.8
Transport9.710.711.510.010.810.610.58.3
Rail2.72.82.92.62.72.72.62.4
Other7.07.98.67.48.18.07.95.9
Communication0.90.90.91.01.01.01.01.1
Construction3.73.83.63.93.53.43.84.6
Trade and related supply2.02.12.32.02.42.01.91.8
Data processing0.10.1
Forestry0.10.10.10.10.10.10.10.2
Semi-processed goods0.50.40.30.20.30.20.20.2
Housing15.814.415.116.315.916.316.316.5
Utilities and other 313.012.312.012.812.413.013.012.9
Source: Goskomstat.

Based on the average of 1970 and 1975 values.

Based on the average of 1975 and 1980 values.

Includes municipal services, public health, education, science, culture and art.

Source: Goskomstat.

Based on the average of 1970 and 1975 values.

Based on the average of 1975 and 1980 values.

Includes municipal services, public health, education, science, culture and art.

Table C.4.USSR: Composition of State Capital Investment in Production, by Type of Project, 1980-89(Share in percent)
198019851986198719881989
Reconstruction and technical
refitting of active enterprises33.038.743.043.745.749.6
Expansion of active enterprises29.023.620.319.217.916.7
New construction38.036.535.135.334.130.6
Individual projects of active enterprises1.21.61.82.33.1
100.0100.0100.0100.0100.0100.0
Source: Goskomstat.
Source: Goskomstat.
Table C.5.USSR: Change in Unfinished Construction in Relation to Gross Fixed Investment by State Enterprises and Organizations and in Relation to GDP, 1986-89 1
As Percent of Gross

Fixed Investment
As Percent of GDP
19866.51.4
19873.50.8
19889.82.2
198911.32.4

Unfinished construction for a given year is measured in the current prices of the different years in which its components were expended. Gross capital investment is in comparable prices, whereas GDP is in current prices. Source is Goskomstat.

Unfinished construction for a given year is measured in the current prices of the different years in which its components were expended. Gross capital investment is in comparable prices, whereas GDP is in current prices. Source is Goskomstat.

Table C.6.USSR: Change in Unfinished Construction in Relation to Gross Fixed Investment of the National Economy, by Sector and by Branch, 1987-89(In percent)
198719881989
Total3.18.79.9
Industry4.615.414.5
Of which:
Electricity9.921.629.3
Coal-5.417.59.5
Oil and gas6.17.911.0
Ferrous metals
Chemicals and petrochemicals2.06.410.4
Machinery1.015.710.1
Forest and paper products6.51.720.2
Building materials43.115.319.6
Light industry2.76.816.1
Food industry7.715.416.1
Agriculture-5.14.13.7
Transportation and communications-1.85.4-1.9
Construction14.79.716.5
Other6.34.410.3
Source: Calculated from data provided by Goskomstat. The aggregate figures in this table differ slightly from those in Table C.5 because the change in unfinished construction is related to a larger gross fixed investment magnitude (i.e., investment of the “national economy,” rather than simply of “state enterprises and organizations”).
Source: Calculated from data provided by Goskomstat. The aggregate figures in this table differ slightly from those in Table C.5 because the change in unfinished construction is related to a larger gross fixed investment magnitude (i.e., investment of the “national economy,” rather than simply of “state enterprises and organizations”).
Table C.7.USSR: Change in Material Circulating Means and Reserves in Relation to NMP, 1970-89(Percent share; in current prices)
Change in Material

Circulating Means and Reserves 1
Of which
Change

in material

circulating

means 3
Change

in reserves

expenditures 3

and other
As percent

of NMP
Contribution

to NMP

growth 2
197011.4
19759.4
19808.5
198512.1-0.25.46.7
198610.5-1.53.76.8
19878.3-2.01.46.9
198810.12.44.55.6
198910.71.35.84.9

Represents essentially changes in stocks, but also includes the change in unfinished construction; sources are Osnovnye pokazateli (1990), pp. 19 and 113 prior to 1985, and Goskomstat for 1985-89.

In percentage points of NMP growth; in current prices. Source is identical to that in footnote 1.

Derived from Osnovnye pokazateli (1990), p. 19 (revised) and Goskomstat.

Represents essentially changes in stocks, but also includes the change in unfinished construction; sources are Osnovnye pokazateli (1990), pp. 19 and 113 prior to 1985, and Goskomstat for 1985-89.

In percentage points of NMP growth; in current prices. Source is identical to that in footnote 1.

Derived from Osnovnye pokazateli (1990), p. 19 (revised) and Goskomstat.

Table D.1.USSR: Distribution of Value Added in the Material Sphere, 1980 and 1985-89(In percent of NMP, at current prices)
Change in Share
1980198519861987198819891980-851985-891980-89
Workers and employees
Wages31.932.633.333.132.20.3
Premia 12.62.72.62.82.70.1
Subtotal36.534.535.335.935.934.9-2.00.4-1.6
Incomes of collective farm workers4.44.44.64.54.24.1-0.3-0.3
Incomes of co-operative workers2.02.02.0
“Subsidiary” incomes7.88.08.18.08.18.40.20.40.6
Current primary incomes
of the population48.746.948.048.448.249.4-1.82.50.7
Enterprise profits, net of premia20.024.227.128.531.330.04.25.810.0
Profits (and social security and other
contributions) of collective farms0.42.52.73.13.63.82.11.33.4
Profits (before profit taxes)20.426.729.831.634.933.86.37.113.4
Social security contributions
of enterprises2.23.33.33.33.33.21.1-0.11.0
Indirect taxes (net)14.86.94.44.11.81.5-7.9-5.4-13.3
Other 213.816.214.412.611.712.12.4-4.1-1.7
Budget and other30.826.422.120.016.816.8-4.4-9.6-14.0
Total 3100.0100.0100.0100.0100.0100.0
Source: Derived from Osnovnye pokazateli (1990), pp. 12-13, with revisions noted by Goskomstat.

Paid out of after-tax profits.

Includes net price equalization taxes on foreign trade and other unspecified items, including, in 1989, the profits of cooperatives.

May not add to 100 percent due to rounding.

Source: Derived from Osnovnye pokazateli (1990), pp. 12-13, with revisions noted by Goskomstat.

Paid out of after-tax profits.

Includes net price equalization taxes on foreign trade and other unspecified items, including, in 1989, the profits of cooperatives.

May not add to 100 percent due to rounding.

Table D.2.USSR: Money Incomes and Expenditures of the Population, 1985-89(In billions of rubles, at current prices)
19851986198719881989
(+) Income420.1435.3452.1493.6558.0
Wages and salaries312.8322.8334.3361.8406.8
Wages279.3288.4299.5321.5347.1
Other remuneration from enterprises9.69.89.811.112.7
Income of collective members23.924.625.026.228.2
Wages in co-ops3.018.9
Receipts from sales of agricultural products17.316.716.819.223.5
Pensions and allowances57.662.364.769.174.7
Stipends2.62.62.72.82.8
Receipts from financial system15.715.416.819.620.6
Other income14.115.516.721.129.7
(-) Taxes and duties31.232.233.636.842.8
(=) Disposable income388.9403.1418.6456.7515.2
(-) Total expenditure364.5375.1386.6414.8453.4
Expenditure on goods and services347.3356.9367.8394.4431.7
Purchases of goods311.2318.6327.1349.3383.5
Purchases of services36.238.340.745.148.2
Other expenditure17.118.218.720.421.6
(=) Saving24.428.032.041.961.8
Accumulation of savings deposits20.123.926.132.745.2
Cash accumulation4.34.15.99.216.6
Source: Goskomstat.
Source: Goskomstat.
Table D.3.USSR: Growth of Money Incomes and Expenditures of the Population, 1986-90 1(Annual percentage rate of growth, at current prices)
1986198719881989(Jan.-Oct.)

1990
(+) Income3.63.99.213.114.5
Wages and salaries3.23.68.212.4
Wages3.23.87.48.0
Other remuneration from enterprises1.90.213.213.8
Income of collective members3.11.54.87.6
Wages in co-ops530.4
Receipts from sales of agricultural products-3.70.914.122.1
Pensions and allowances8.14.06.78.1
Stipends3.94.51.3
Receipts from financial system-1.69.216.35.0
Other income10.07.925.941.1
(-) Taxes and duties3.04.49.716.3
(=) Disposable income3.73.89.112.8
(-) Total expenditure (excluding taxes)2.93.17.39.3
Expenditure on goods and services2.83.17.29.514.4
Purchases of goods2.42.76.89.8
Purchases of services5.86.510.67.0
Other expenditure6.22.89.15.9
(=) Saving14.614.330.947.6
Accumulation of savings deposits19.19.125.138.5
Cash accumulation-6.344.957.079.7

Derived from Table D.2 for 1986-89; for January-October 1990 the source is Sotsial’ no-ekonomicheskoe razvitie (1990), p. 5.

Derived from Table D.2 for 1986-89; for January-October 1990 the source is Sotsial’ no-ekonomicheskoe razvitie (1990), p. 5.

Table D.4.USSR: Shares of Income, Expenditure and Saving in Total Income of the Population, 1985-89 1(In percent, at current prices)
19851986198719881989
Income100.0100.0100.0100.0100.0
Wages66.566.366.265.162.2
Other remuneration from enterprises2.32.32.22.32.3
Income of collective members5.75.75.55.35.0
Wages in co-ops0.63.4
Receipts from sales of agricultural products4.13.83.73.94.2
Pensions and allowances13.714.314.314.013.4
Stipends0.60.60.60.60.5
Receipts from financial system3.73.53.74.03.7
Other income3.43.63.74.35.3
Expenditure including taxes100.0100.0100.0100.0100.0
Purchases of goods78.678.277.977.377.3
Purchases of services9.19.49.710.09.7
Taxes and duties7.97.98.08.28.6
Other4.34.54.54.54.4
Private Saving Rate Definitions (in percent)
Saving/Total Income 25.86.47.18.511.1
Saving/Disposable Income6.36.97.69.212.0
Saving/GDP3.13.53.94.86.7

Derived from Table D.2.

Saving defined as the change in savings deposits plus change in currency.

Derived from Table D.2.

Saving defined as the change in savings deposits plus change in currency.

Table D.5.USSR: Sources and Uses of Funds of State Enterprises and Organizations 1, 1985-89(In billions of rubles, at current prices)
19851986198719881989
Sources
Gross operating surplus215.4231.8241.2273.0301.5
(-) Turnover tax 297.791.594.4101.0111.1
(+) Net price subsidies 369.275.376.988.199.7
Profit before payments to the budget 4186.9 13215.6223.7260.1290.1
Payments to budget out of profits 5118.4128.5126.3118.4115.5
After-tax profits (derived)68.587.197.4141.7174.6
(+) Depreciation 6103.1110.0118.1125.6134.5
Internally generated funds (derived)171.6197.1215.5267.3309.1
memo: allocation to enterprise funds 7(41.4)(77.4)(126.4)(264.2)(334.2)
(+) Transfers from budget for investment 857.660.865.270.461.9
Internal funds plus transfers (derived)229.2257.9280.7337.7371.0
Net borrowing from banks 920.8-3.7-44.3-57.0-32.1
Borrowing from banks(26.9)(0.9)(-21.2)(-30.2)(-15.1)
Accumulation of deposits and money (M2)(6.1)(4.6)(23.1)(26.8)(17.0)
Total250.0254.8236.4280.7338.9
Uses
Fixed capital investment 10140.5167.1173.4193.8201.2
Change in stocks 1121.06.0-1.09.441.9
Expenditure from funds 1228.859.870.9151.3219.0
Total190.2232.9243.2354.5462.1
Residual and missing items
(excess of sources over uses)59.821.9-6.8-73.8-123.2
memo: payments to budget net of transfers60.867.761.148.053.6
also net of taxes and subsidies89.383.978.660.965.0

Including collective farms and cooperatives.

Narkhoz 1988 (1989), p. 624, and Ministry of Finance.

From Ministry of Finance; includes expenditure on economy for price differentials, price subsidies, and compensation for increases in procurement prices.

Finansy SSSR 1987-88 (1989), p. 110 for 1987-88. Source for other years is Goskomstat.

Ministry of Finance.

Excludes collective farms; sources are for 1985, 1987 and 1988: Narkhoz 1988 (1989), p. 1986: Narkhoz 1987 (1988), p. 585; 1989; Narkhoz 1989 (1990).

Finansy SSSR 1987-88 (1989), p. 164 for 1987-88; source for other years is Goskomstat.

Ministry of Finance.

Gosbank; 1986 borrowing excludes change in loans and deposits due to canceling of rub 70 billion of escrow accounts. Deposits include construction accounts of firms.

Kapital’ noe stroitelstvo SSSR (1988), pp. 214-215 for 1985-86 and Finansy SSSR 1987-88 (1989), p. 193 for 1987-88, and Finansy SSSR 1989 (1990), p. 218 for 1989; less investment of budgetary institutions, from the Ministry of Finance.

Goskomstat.

Finansy SSSR 1987-88 (1989), p. 164 and Finansy SSSR 1989 (1990), p. 88 “expenditure from funds” less Finansy SSSR 1987-88 (1989), p. 193 and Finansy SSSR 1989 (1990), p. 111 financing of “investment from the production fund” (to avoid double-counting of investment expenditure). An alternative would be to subtract “own financing of investment” reported in the same sources.

Includes estimate of profits of collective farms.

Including collective farms and cooperatives.

Narkhoz 1988 (1989), p. 624, and Ministry of Finance.

From Ministry of Finance; includes expenditure on economy for price differentials, price subsidies, and compensation for increases in procurement prices.

Finansy SSSR 1987-88 (1989), p. 110 for 1987-88. Source for other years is Goskomstat.

Ministry of Finance.

Excludes collective farms; sources are for 1985, 1987 and 1988: Narkhoz 1988 (1989), p. 1986: Narkhoz 1987 (1988), p. 585; 1989; Narkhoz 1989 (1990).

Finansy SSSR 1987-88 (1989), p. 164 for 1987-88; source for other years is Goskomstat.

Ministry of Finance.

Gosbank; 1986 borrowing excludes change in loans and deposits due to canceling of rub 70 billion of escrow accounts. Deposits include construction accounts of firms.

Kapital’ noe stroitelstvo SSSR (1988), pp. 214-215 for 1985-86 and Finansy SSSR 1987-88 (1989), p. 193 for 1987-88, and Finansy SSSR 1989 (1990), p. 218 for 1989; less investment of budgetary institutions, from the Ministry of Finance.

Goskomstat.

Finansy SSSR 1987-88 (1989), p. 164 and Finansy SSSR 1989 (1990), p. 88 “expenditure from funds” less Finansy SSSR 1987-88 (1989), p. 193 and Finansy SSSR 1989 (1990), p. 111 financing of “investment from the production fund” (to avoid double-counting of investment expenditure). An alternative would be to subtract “own financing of investment” reported in the same sources.

Includes estimate of profits of collective farms.

Table D.6.USSR: Sources and Uses of Funds of State Enterprises and Organizations as a Share of GDP, 1 1985-89(In percent of GDP, at current prices)
19851986198719881989
Sources
Gross operating surplus (derived)27.729.029.231.232.1
(-) Turnover tax12.611.511.411.511.8
(+) Net price subsidies8.99.49.310.110.6
Profit before payments to the budget24.127.027.129.730.9
(-) Payments to budget out of profits15.216.115.313.512.3
After-tax profits (derived)8.810.911.816.218.6
(+) Depreciation13.313.814.314.414.3
Internally generated funds (derived)22.124.726.130.532.9
memo: allocation to enterprise funds(5.3)(9.7)(15.3)(30.2)(35.6)
(+) Transfers from budget for investment7.47.67.98.06.6
Internal funds plus transfers (derived)29.532.334.038.639.5
Net borrowing from banks2.7-0.5-5.4-6.6-3.4
Borrowing from banks(3.5)(0.1)(-2.6)(-3.5)(-1.6)
Accumulation of deposits and money (M2)(0.8)(0.6)(2.8)(3.1)(1.8)
Total32.231.828.732.136.1
Uses
Fixed capital investment18.120.921.022.121.4
Change in stocks2.70.8-0.11.14.5
Expenditure from funds3.77.58.617.323.3
Total24.529.229.540.549.2
Residual and missing items7.72.7-0.8-8.4-13.1
memo: payments to budget net of transfers7.88.57.45.55.7
also net of taxes and subsidies11.510.59.57.06.9
memo: GDP, in billions of rubles777799825875940

Derived from Table D.5 and Table 1 of Appendix II-2.

Derived from Table D.5 and Table 1 of Appendix II-2.

Table E.1.USSR: Price Developments, 1971-89
(Annual Average Percentage Change)
1971-751976-801981-851986-891986198719881989Jan.-Sept.

1990
Retail prices 1-0.10.71.11.52.01.30.62.03.7
Food0.30.51.72.85.24.90.50.82.5
Alcoholic beverages(0.4)(0.7)(4.7)(9.1)(23.4)(14.7)(—)(—)(…)
Nonfood products-0.30.80.50.3-1.5-0.83.5
Collective farm market prices4.86.42.02.7-3.62.62.69.524
Agricultural procurement prices 25.60.83.013.06.0
Wholesale industrial prices 21.7
Sources: Goskomstat and Torgovlia SSSR (1989), pp. 75, 314; Narkhoz 1989 (1990) p. 138; for the first nine months of 1990: Sotsial’ no-ekonomicheskoe razvitie (1990), pp. 5-6.

In state and cooperative trade.

The index of agricultural procurement prices is not available before 1984, and the index of wholesale industrial prices is not available before 1989.

Sources: Goskomstat and Torgovlia SSSR (1989), pp. 75, 314; Narkhoz 1989 (1990) p. 138; for the first nine months of 1990: Sotsial’ no-ekonomicheskoe razvitie (1990), pp. 5-6.

In state and cooperative trade.

The index of agricultural procurement prices is not available before 1984, and the index of wholesale industrial prices is not available before 1989.

Table E.2.USSR: Growth in the Average Monthly Wage and Labor Productivity, 1966-1989
Average Annual Rate of Growth, in Percent
Average Monthly Wage 2Primary Incomes

of Population

Received in

Material Sphere

as Percent of NMP 4
Material sphere
Labor

productivity 1
Total

economy
NominalReal 3
1966-706.81970:50.1
1971-754.53.63.94.01975:50.6
1976-803.33.02.92.21980:48.7
1981-852.72.42.81.71985:46.9
1986-892.76.06.34.71989:50.9
19863.82.93.11.1
19872.43.73.52.2
19882.38.38.98.3
19892.39.49.97.7
1990 (First nine months)8.4 5
Source: Narkhoz 1988 (1989), p. 62 for 1966-75; SSSR v tsifrakh (1989), p. 53 for 1976-89. Sources for individual years are Trud v SSSR (1988), p. 233 from 1986; Narkhoz 1988 (1989), p. 11 and the foregoing for 1987 and 1988; and SSSR v tsifrakh (1989), p. 13 for 1989.

Refers to labor productivity in activities whose value added is included in NMP.

Source: Goskomstat.

Using Table E.1.

Source: Osnovnye pokazateli (1990), p. 12.

Source: Sotsial’ no-ekonomicheskoe razvitie (1990), p. 5; may not be strictly comparable with earlier figures.

Source: Narkhoz 1988 (1989), p. 62 for 1966-75; SSSR v tsifrakh (1989), p. 53 for 1976-89. Sources for individual years are Trud v SSSR (1988), p. 233 from 1986; Narkhoz 1988 (1989), p. 11 and the foregoing for 1987 and 1988; and SSSR v tsifrakh (1989), p. 13 for 1989.

Refers to labor productivity in activities whose value added is included in NMP.

Source: Goskomstat.

Using Table E.1.

Source: Osnovnye pokazateli (1990), p. 12.

Source: Sotsial’ no-ekonomicheskoe razvitie (1990), p. 5; may not be strictly comparable with earlier figures.

Table F.1.USSR: Growth of Population of Working Age and Employment, 1980-88
Absolute IncreaseAverage Annual

Rate of Growth
Population of

working age 1
Employment

in socialized

sector 2
Population of

working age 1
Employment

in socialized

sector 2
(in thousands of persons)(in percent)
RSFSR9003960.10.1
Central Asia, Kazakhstan, and Azerbaidzhan4,6282,3582.31.6
Other republics5964680.20.2
USSR6,1243,2220.50.3

Period covered is 1979-87; source is Naselenie SSSR 1987 (1988), pp. 48-94.

Includes the categories “workers and employees” and “collective farm workers,” which have typically accounted for more than 95 percent of total employment. Source is Sotsial’noe razvitie SSSR (1990), p. 49.

Period covered is 1979-87; source is Naselenie SSSR 1987 (1988), pp. 48-94.

Includes the categories “workers and employees” and “collective farm workers,” which have typically accounted for more than 95 percent of total employment. Source is Sotsial’noe razvitie SSSR (1990), p. 49.

Table F.2.USSR: Distribution of Employment by Sector, 1975-89(In percent)
1975198019851989
Industry29.129.429.328.6
Agriculture and forestry22.220.319.518.5
Construction9.18.98.810.8
Transport and communications8.89.19.27.5
Trade, etc7.87.98.07.5
Other material sphere 11.21.41.51.8
Nonmaterial sphere 121.823.123.825.3
100.0100.0100.0100.0
Source: Goskomstat.

These figures may differ from other official figures due to the inclusion here, for simplicity, of all employment in transport and communications as employment in the material sphere.

Source: Goskomstat.

These figures may differ from other official figures due to the inclusion here, for simplicity, of all employment in transport and communications as employment in the material sphere.

Table G.1.USSR: Structure of Foreign Trade, 1980-90 1
First Half
19801985198619871988198919891990
(Shares in percent, in current prices)
Total exports, f.o.b.100.0100.0100.0100.0100.0100.0100.0100.0
Machinery & equipment
including transport15.813.915.015.516.216.414.519.5
Fuels & electricity46.952.747.346.542.139.9
Ores, concentrate53.352.0
metals & fabrications8.87.58.48.59.510.5
Chemicals, fertilizers & rubber3.33.53.44.04.04.04.44.1
Wood, cellulose, paper products4.13.03.43.33.53.5
Textile, fibers & other
semifinished goods1.91.31.41.51.61.6
Food raw materials & products1.91.51.61.61.71.61.62.0
Manufactured consumer goods2.52.02.42.62.82.62.93.8
Other14.814.217.017.118.619.9
Total imports, f.o.b100.0100.0100.0100.0100.0100.0100.0100.0
Machinery & equipment
including transport33.937.140.741.440.938.536.241.1
Fuels & electricity3.05.34.63.94.43.0
Ores, concentrates,10.48.9
metals & fabrications10.88.38.38.18.07.3
Chemicals, fertilizers, & rubber5.35.05.15.35.05.15.24.4
Wood, cellulose, paper products2.01.31.31.21.21.2
Textile fibers & other
semifinished goods2.21.71.31.51.61.6
Food raw material products24.221.117.116.115.816.620.620.4
Manufactured consumer goods12.112.613.413.012.814.412.715.8
Other6.27.68.29.510.312.3
(In billions of rubles)
Memorandum items:
Total exports49.672.768.368.167.168.733.430.4
Total imports44.762.452.660.765.072.136.038.0
Sources: Ministry of Foreign Economic Relations; and Goskomstat.

Tables G.1-G.8 exclude gold and are based on data in valuta rubles, i.e., foreign currency values multiplied by the official exchange rate. The resulting ruble values are not directly comparable to statistics in domestic prices.

Sources: Ministry of Foreign Economic Relations; and Goskomstat.

Tables G.1-G.8 exclude gold and are based on data in valuta rubles, i.e., foreign currency values multiplied by the official exchange rate. The resulting ruble values are not directly comparable to statistics in domestic prices.

Table G.2.USSR: Composition of Exports, 1980-89(In percent at current prices)
198019851986198719881989
Total exports, f.o.b. 1100.0100.0100.0100.0100.0100.0
Machinery, equipment, and
transportation items15.813.615.015.516.216.4
Machine tools and presses0.50.30.40.50.50.5
Energy and electrical equipment2.12.22.12.22.42.7
Mining, drilling, and
metallurgy equipment2.11.61.61.71.51.5
Lifting, conveying, and
road equipment2.40.20.60.70.60.7
Tractors and agricultural
equipment0.70.40.60.60.90.7
Vehicles (including ships
and planes) and parts4.74.34.74.95.25.2
Other3.34.65.04.95.15.1
Fuels and energy46.852.747.346.542.139.9
of which:
Oil and oil products36.438.932.933.529.427.1
Natural gas7.410.610.89.48.88.9
Metal ores, pig iron, alloys2.01.72.12.22.12.2
Rolled products and pipe3.12.62.92.82.83.0
Chemicals and fertilizer2.53.12.72.63.13.2
Logs and lumber2.81.92.11.92.32.2
Pulp, paper, and cardboard0.80.81.01.01.01.0
Cotton and fibers1.81.11.21.31.31.3
Furs and pelts0.20.20.20.20.20.1
Agricultural and fishing products0.80.70.80.80.90.8
Consumer appliances0.80.50.60.60.60.5
Other 222.621.124.124.627.429.4
Sources: Ministry of Foreign Economic Relations (MVES) and Goskomstat.

Excludes gold.

Other exports includes unallocated exports by new export firms.

Sources: Ministry of Foreign Economic Relations (MVES) and Goskomstat.

Excludes gold.

Other exports includes unallocated exports by new export firms.

Table G.3.USSR: Composition of Imports, 1980-89(In percent at current prices)
198019851986198719881989
Total imports, f.o.b100.0100.0100.0100.0100.0100.0
Machinery, equipment, and
transportation items33.937.240.741.140.938.5
Machine tools and presses1.82.22.42.62.62.1
Energy and electrical equipment,
wire, and cable2.72.72.93.02.82.4
Mining, lifting and
conveying equipment2.12.83.03.13.02.7
Industrial machinery
and equipment5.24.24.03.93.94.6
Agricultural machinery
and equipment1.71.92.02.01.81.4
Railroad equipment1.31.72.02.01.81.4
Vehicles (including
ships) and parts5.57.37.36.56.55.6
Other13.614.417.117.818.317.8
Rolled products and pipe5.85.35.45.15.24.2
Chemicals, paints, and dyes3.63.13.13.33.43.8
Pulp and paper1.00.60.60.60.70.7
Wool, cotton thread1.00.80.70.91.00.9
Grain (including rice)7.57.13.32.83.84.5
Coffee, tea, cocoa1.11.11.00.90.71.0
Sugar4.95.65.25.04.23.9
Tobacco and cigarettes1.11.01.00.90.80.7
Meat2.01.21.41.41.11.0
Fruits and vegetables2.11.62.01.81.81.4
Textiles, clothing, and shoes6.97.27.56.86.57.2
Furniture0.90.80.90.90.90.8
Medicines1.21.72.02.12.02.6
Domestic and cultural goods0.80.70.80.80.80.7
Other26.225.024.425.626.228.1
Sources: Ministry of Foreign Economic Relations (MVES) and Goskomstat.
Sources: Ministry of Foreign Economic Relations (MVES) and Goskomstat.
Table G.4.USSR: Gross and Net Barter Terms of Trade, 1960-89(Average annual growth rate, in percent)
Net Barter

Terms of Trade 1

(nbtt)

(1)
Gross Barter

Terms of Trade 2

(gbtt)

(2)
Ratio of

nbtt to

gbtt 3
Cumulative

Trade

Balance

(In billions

of valuta rubles)
1961-65 4-1.9-3.01.10.9
1966-70 4-1.9-3.01.15.2
1971-75 51.45.2-3.70.1
1976-80 55.00.64.413.1
1981-85 62.94.0-1.031.9
1986-89 7-4.7-2.4-2.312.0
1986 6-11.5-14.54.75.7
1987 6-1.0-4.93.27.5
1988 6-9.7-1.0-9.12.1
1989 7-1.06.9-7.5-3.3
Sources: Derived from Vneshniaia torgovlia (1987 and 1988), Table VII; and Vneshnie ekonomicheskie sviazi (1990), Tables I, VII and VIII.

Defined as the ratio of the valuta export price index to the valuta import price index, for total foreign trade.

Defined as the ratio of the import volume index to the export volume index, for total foreign trade.

An increase (decrease) in this ratio means that the normalized trade balance (i.e., the trade balance divided by the base period value of exports) is rising (falling) and the net inward transfer of real resources is smaller (larger) than would be possible given a fixed financing constraint.

1960 base year weights.

1970 base year weights.

1980 base year weights.

1985 base year weights.

Sources: Derived from Vneshniaia torgovlia (1987 and 1988), Table VII; and Vneshnie ekonomicheskie sviazi (1990), Tables I, VII and VIII.

Defined as the ratio of the valuta export price index to the valuta import price index, for total foreign trade.

Defined as the ratio of the import volume index to the export volume index, for total foreign trade.

An increase (decrease) in this ratio means that the normalized trade balance (i.e., the trade balance divided by the base period value of exports) is rising (falling) and the net inward transfer of real resources is smaller (larger) than would be possible given a fixed financing constraint.

1960 base year weights.

1970 base year weights.

1980 base year weights.

1985 base year weights.

Table G.5.USSR: Foreign Trade Developments by Main Trading Regions, 1985-89(Percentage change)
ExportsImportsTerms of

Trade
ValuesVolumesValuesVolumes
Nonsocialist countries1
1986-19.515.5-23.0-14.3-22.4
19875.56.0-10.3-2.87.8
19881.26.316.48.6-11.2
19899.4-1.026.818.53.3
1986-89 (Annual average)-1.56.50.51.8-6.4
CMEA countries
19864.93.9-0.20.71.9
1987-3.50.92.81.5-5.6
1988-4.02.5-6.3
1989-2.81.91.92.0-4.5
1986-89 (Annual average)-1.41.71.71.0-3.7
Sources: Vneshniaia torgovlia (various issues) and Vneshnie ekonomicheskie sviazi (various issues).

Nonsocialist countries comprise all countries except the nine CMEA partner countries, Albania, the People’s Republic of China, the Lao People’s Democratic Republic, the Democratic People’s Republic of Korea, and Yugoslavia.

Sources: Vneshniaia torgovlia (various issues) and Vneshnie ekonomicheskie sviazi (various issues).

Nonsocialist countries comprise all countries except the nine CMEA partner countries, Albania, the People’s Republic of China, the Lao People’s Democratic Republic, the Democratic People’s Republic of Korea, and Yugoslavia.

Table G.6.USSR: Export and Import Values, Volumes and Unit Values, 1981-89 1(1980 = 100)
198119821983198419851986198719881989
Exports
In current prices115127137150147138138135139
In 1980 prices101107111115110121125131131
Unit values114119123130133114110103106
Imports
In current prices118127134147156141136146162
In 1980 prices108117123128134126124129141
Unit values110108109115116112110113115
Sources: Ministry of Foreign Economic Relations (MVES) and Goskomstat. Implicit net barter terms of trade figures may differ from those in Table G.4 due to differences in some base year weights and rounding.

1975 base year weights for 1980-84 and 1980 base year weights for 1985-89.

Sources: Ministry of Foreign Economic Relations (MVES) and Goskomstat. Implicit net barter terms of trade figures may differ from those in Table G.4 due to differences in some base year weights and rounding.

1975 base year weights for 1980-84 and 1980 base year weights for 1985-89.

Table G.7.USSR: Direction of Trade, 1980-90(In billions of rubles)
1980198419851986198719881989First Half

1990
I. Exports49.674.472.568.368.167.168.730.4
Socialist Countries26.942.144.345.644.242.942.218.2
CMEA24.338.240.142.240.739.038.016.4
Cuba2.33.83.83.83.73.73.8
Czechoslovakia3.66.66.86.96.86.46.3
GDR4.97.57.77.97.67.26.7
Poland4.46.16.56.86.56.35.8
Other2.63.94.23.53.53.84.31.8
China0.20.50.80.90.71.01.3
Yugoslavia2.13.12.71.71.91.71.9
Non-Socialist Countries22.732.328.222.723.924.226.512.2
Developed Countries15.921.318.613.114.214.716.47.9
Finland2.02.42.31.61.71.51.8
France2.22.42.11.51.51.61.3
German (Fed. Rep.)2.94.24.02.72.32.42.5
Italy2.13.22.51.61.81.71.9
United Kingdom0.91.41.21.31.61.82.2
United States0.20.30.30.30.30.30.5
Less Developed Countries6.910.99.69.69.89.610.14.3
India0.91.51.61.01.11.11.1
Iraq0.50.30.30.30.30.30.2
II. Imports44.565.469.162.660.765.072.138.0
Socialist Countries23.68.342.241.842.143.444.722.8
CMEA21.434.637.637.838.939.840.620.7
Cuba2.03.54.13.83.83.83.9
Czechoslovakia3.56.06.66.66.96.86.6
GDR4.37.47.67.17.17.07.2
Poland3.65.35.56.16.37.17.4
Other2.23.64.64.03.33.54.12.1
China0.10.50.50.80.90.80.81.1
Yugoslavia1.82.83.32.72.12.12.4
Non-Socialist Countries20.827.126.920.718.621.727.515.2
Developed Countries15.719.619.315.913.916.320.511.4
Finland1.92.32.72.42.02.22.1
France1.51.81.61.11.11.21.2
Germany (Fed. Rep.)2.93.33.12.92.63.24.1
Italy0.91.31.31.51.71.31.6
United Kingdom1.00.80.70.50.50.61.0
United States1.42.82.41.10.91.82.9
Less Developed Countries5.17.57.64.94.75.37.03.8
India0.91.31.51.21.11.11.8
Iraq0.30.70.60.30.81.01.0
Sources: Ministry of Foreign Economic Relations (MVES) and Goskomstat.
Sources: Ministry of Foreign Economic Relations (MVES) and Goskomstat.
Table G.8.USSR: Seasonal Variation of Aggregate Trade Flows, 1984-89
Q1Q2Q3Q4
I. (In billions of rubles)
Exports
198417.118.718.519.9
198515.618.618.320.0
198616.216.916.219.0
198715.116.916.919.1
198815.817.216.118.1
198915.917.215.919.6
Imports
198415.917.215.017.2
198516.919.415.717.2
198616.117.014.115.4
198714.117.213.915.5
198815.817.614.617.1
198917.318.516.519.8
II. (In percent of average quarterly levels)
Exports
198423.025.124.926.7
198521.525.725.227.6
198623.724.723.727.8
198722.224.824.828.0
198823.525.624.027.0
198923.125.023.128.5
Imports
198424.326.323.026.3
198524.528.022.724.9
198625.727.122.524.6
198723.228.322.925.5
198824.327.122.526.3
198924.025.722.927.5
III. Average (1984-89)
Exports
average per quarter22.825.224.327.6
Imports
average per quarter24.327.122.825.9
Sources: Ministry of Foreign Economic Relations (MVES) and Ministry of Finance.
Sources: Ministry of Foreign Economic Relations (MVES) and Ministry of Finance.
Table H.1.USSR: Balance of Payments in Convertible Currencies on a Settlements Basis, 1970-89(In millions of rubles)
1970198019851986198719881989
Current Account1141,482-2,9201,1691,328-1,025-4,455
Trade balance-701,881-1,3922,4212,364919-2,109
Exports1,94215,95919,69416,83412,34912,66713,171
Imports-2,012-14,078-21,086-14,413-9,985-11,748-15,280
Services balance184-398-1,541-1,285-1,064-2,009-2,420
Transport and insurance202499-212165232-222-264
Travel20449593121125127
Interest-32-617-553-966-1,169-1,245-1,838
Other-6-324-871-577-248-667-445
Transfers-11333286574
Capital Account731,0651,647-721-2,7925872,096
Medium-term and
long-term capital731,065547-1,121-2,192-1,013-1,604
Foreign direct investment-12-22-26-148-124305-165
Loans received (net)-1,223-1,424-2,464-1,647-1,548
Disbursement2,3962,3771,4031,5381,992
Amortization-3,619-3,801-3,867-3,185-3,540
Medium term-744-571-499-300-735
Long term-1,274-1,760-1,969-2,001-1,722-1,689
Commercial credit-89-518-1,115-1,261-1,367-1,163-1,116
Amortization received1241,1921,935621545500319
Other-39-105-139-170-149-171-210
Short-term capital net1,100400-6001,6003,700
Overall Balance1872,547-1,273448-1,464-438-2,359
Sources: Ministry of Finance, Vneshekonombank, and estimates.
Sources: Ministry of Finance, Vneshekonombank, and estimates.
Table H.2.USSR: Balance of Payments in Convertible Currencies on a Transactions Basis, 1985-89(In millions of rubles)
19851986198719881989
Current account (excl. gold)-4501,2664,181943-2,438
Current account (incl. gold)1,0574,0806,3983,253-128
Trade balance1,0782,5185,2172,887-92
Exports23,05218,86019,85620,32022,208
Imports-21,974-16,342-14,639-17,433-22,300
Services balance-1,541-1,285-1,064-2,009-2,420
Transport and insurance-212165232-222-264
Travel9593121125127
Interest, net-553-966-1,169-1,245-1,838
(interest gross)(…)(-1,654)(-1,680)(-1,726)(-2,316)
Other-871-577-248-667-445
Transfers1333286574
Gold exports 11,5072,8142,2172,3102,310
Capital account-2,330-3,632-7,862-3,691-2,231
Medium-and long-term547-1,121-2,192-1,013-1,604
Foreign direct investment-26-148-124305-165
Loans received (net)-1,223-1,424-2,464-1,647-1,548
Disbursement2,3962,3771,4031,5381,992
Amortization paid-3,619-3,801-3,867-3,185-3,540
Medium term-744-571-499-300-735
Long term-1,760-1,969-2,001-1,722-1,689
Commercial credit-1,115-1,261-1,3671,163-1,116
Amortization received1,935621545500319
Other-139-170-149-171-210
Short-term financial credits1,100400-6001,6003,700
Trade credits-3,977-2,911-5,070-4,278-4,327
Overall balance-1,273448-1,464-438-2,359
Sources: Goskomstat, Ministry of Finance, Vneshekonombank, and estimates.

Estimates.

Sources: Goskomstat, Ministry of Finance, Vneshekonombank, and estimates.

Estimates.

Table H.3.USSR: Balance of Payments in Nonconvertible Currencies with Socialist Countries on a Settlements Basis, 1970-89 1(In millions of rubles)
1970198019851986198719881989
Current Account-641,2234703,613216-732-3,447
Trade balance101,7628233,634664-152-2,810
Exports6,77324,66941,36043,64242,14040,98738,810
Imports-6,763-22,907-40,537-40,008-41,476-41,139-41,620
Services balance-74-311-103-595-650-698
Transport and insurance116333483534567393434
Travel-4-2-25-226-42-301-439
Interest1041318335
Other-186-362-457-515-1,251-825-728
Transfers-508-354821477061
Capital Account657-442-1,681-2,779-1,481-6456
Medium and long-term capital654-331-1,333-2,341-1,175-323394
of which:
Amortization paid-62-122-264-245-229-101-206
Amortization received7735961,7701,1621,6171,9052,594
Government credit
extended 2-57-805-2,839-3,258-2,563-2,127-1,994
Foreign direct investment-2-121-376-364-345-379-478
Other51028-74395790
Total (Net)593781-1,211834-1,265-1,377-3,441
Sources: Ministry of Finance, Vneshekonombank, and staff estimates.

Socialist countries comprise CMEA countries, Albania, the People’s Republic of China, the Lao People’s Democratic Republic, the Democratic People’s Republic of Korea, and Yugoslavia.

Government refinancing of CMEA trade credits.

Sources: Ministry of Finance, Vneshekonombank, and staff estimates.

Socialist countries comprise CMEA countries, Albania, the People’s Republic of China, the Lao People’s Democratic Republic, the Democratic People’s Republic of Korea, and Yugoslavia.

Government refinancing of CMEA trade credits.

Table H.4.USSR: Balance of Payments in Nonconvertible Currencies with Socialist Countries on a Transactions Basis, 1980-89 1(In millions of rubles)
198019851986198719881989
Current account2,6591,9314,0161,956-770-2,988
Trade balance3,1982,2844,0372,404-190-2,351
Exports26,98444,06845,41044,19742,86741,765
Imports-23,786-41,784-41,373-41,793-43,057-44,116
Services balance-311-103-595-650-698
Transport & insurance333483534567393434
Travel-2-25-226-42-301-439
Interest1041318335
Other-362-457-515-1,251-825-728
Transfers-508-354821477061
Capital account-1,878-3,142-3,182-3,221-607-453
Medium-term and long-term capital-452-1,709-2,705-1,520-702-84
Foreign direct investment-121-376-364-345-379-478
Amortization paid-122-264-245-229-101-206
Amortization received5961,7701,1621,6171,9052,594
Government credit extended 2-805-2,839-3,258-2,563-2,127-1,994
Other1028-74395790
Trade credits-1,436-1,461-403-1,74038-459
Total (net)781-1,211834-1,265-1,377-3,441
Sources: Ministry of Finance, Goskomstat, and estimates.

Socialist countries comprise CMEA countries, Albania, the People’s Republic of China, the Lao People’s Democratic Republic, the Democratic People’s Republic of Korea, and Yugoslavia.

Government refinancing of CMEA trade credits.

Sources: Ministry of Finance, Goskomstat, and estimates.

Socialist countries comprise CMEA countries, Albania, the People’s Republic of China, the Lao People’s Democratic Republic, the Democratic People’s Republic of Korea, and Yugoslavia.

Government refinancing of CMEA trade credits.

Table H.5.USSR: Balance of Payments in Nonconvertible Currencies with Nonsocialist Countries on a Settlements Basis, 1970-89 1(In millions of rubles)
1970198019851986198719881989
Current Account-282-806-540-1,143-201-660-1,524
Trade balance-301-472-342-952-112-522-1,488
Exports7343,4884,3793,1893,4373,2693,388
Imports-1,035-3,960-4,721-4,141-3,549-3,791-4,876
Services balance19-331-189-134-38-148-48
Transport and insurance21-76-32-3-7-35-15
Travel19995-18
Interest1623-92018
Other-3-264-182-163-27-133-33
Transfers-3-9-57-511012
Capital account3786347488341,2031,477726
Medium-term and
long-term capital3906458079051,371809912
of which:
Amortization paid-2-63-86-87-88-132
Amortization received3906478709911,4588971,044
Foreign direct investment-11-11-58-70-167669-185
Other-1-1-1-1-1-1
Total (net)96-172208-3091,002817-798
Sources: Ministry of Finance, Vneshekonombank, and estimates.

See Table H.3 for a listing of socialist countries.

Sources: Ministry of Finance, Vneshekonombank, and estimates.

See Table H.3 for a listing of socialist countries.

Table H.6.USSR: Balance of Payments in Nonconvertible Currencies with Nonsocialist Countries on a Transactions Basis, 1980-89 1(In millions of rubles)
198019851986198719881989
Current account-762-325-1,047-309-760-987
Trade balance-428-127-856-220-622-951
Exports3,8115,5444,0154,0893,9284,769
Imports-3,383-5,671-4,871-4,309-4,550-5,720
Services balance-331-189-134-38-148-48
Transport and insurance-76-32-3-7-35-15
Travel9995-18
Interest1623-92018
Other-264-182-163-27-133-33
Transfers-3-9-57-511012
Capital account5905337381,3111,577189
Medium-term and long-term capital6458079051,371809912
of which:
Amortization paid-2-63-86-87-88-132
Amortization received6478709911,4588971,044
Foreign direct investment-11-58-70-167669-185
Other-1-1-1-1-1
Trade credits-44-215-96108100-537
Total (net)-172208-3091,002817-798
Sources: Ministry of Finance, Vneshekonombank, and estimates.

See Table H.3 for a listing of socialist countries.

Sources: Ministry of Finance, Vneshekonombank, and estimates.

See Table H.3 for a listing of socialist countries.

Table H.7.USSR: Balance of Payments in Convertible Currencies on a Settlements Basis, in U.S. Dollars, 1985-90 1(In millions of U.S. dollars)
19851986198719881989First

Half

1990
Current account-3,4891,6622,097-1,687-7,068-1,969
Trade balance-1,6633,4413,7321,513-3,346434
Exports23,52923,92919,49620,85120,89610,728
Imports-25,192-20,488-15,764-19,338-24,242-10,293
Services balance-1,841-1,827-1,680-3,307-3,839-2,403
Transport and Insurance-253235366-365-419-154
Travel114132191206201141
Interest-661-1,373-1,846-2,049-2,916-2,401
Other-1,041-820-392-1,098-70612
Transfers164744107117
Capital account1,968-1,025-4,4089663,325-9,780
Medium-term and long-term capital654-1,593-3,461-1,667-2,545-2,322
Foreign direct investment-31-210-196502-262
Loans received-1,461-2,024-3,890-2,711-2,456-2,461
Disbursement2,8633,3792,2152,5323,160815
Amortization paid-4,324-5,403-6,105-5,243-5,616-3,276
Medium-term-889-812-788-494-1,166-1,163
Long-term-2,103-2,799-3,159-2,835-2,680-1,558
Commercial credit-1,332-1,792-2,158-1,914-1,771-555
Amortization received2,312883860823506355
Other166-242-235-281-333-215
Short-term capital (net)1,314569-9472,6345,870-7,458
Overall balance-1,521637-2,311-721-3,743-11,749
Sources: Ministry of Finance, Vneshekonombank, and estimates.

Excluding gold exports.

Sources: Ministry of Finance, Vneshekonombank, and estimates.

Excluding gold exports.

Table H.8.USSR: Balance of Payments in Convertible Currencies on a Transactions Basis, in U.S. Dollars, 1985-89(In millions of U.S. dollars)
19851986198719881989
Current account (excl. gold)-5381,8006,6011,552-3,868
Current account (incl. gold)1,2635,80010,1015,355-203
Trade balance1,2883,5798,2374,752-146
Exports27,54126,80931,34833,44935,234
Imports-26,253-23,230-23,112-28,696-35,380
Services balance-1,841-1,827-1,680-3,307-3,839
Transport and insurance-253235366-365-419
Travel114132191206201
Interest, net-661-1,373-1,846-2,049-2,916
(interest, gross)(…)(-2,351)(-2,652)(-2,841)(-3,674)
Other-1,041-820-392-1,098-706
Transfers164744107117
Gold exports 11,8004,0003,5003,8023,665
Capital account-2,784-5,163-12,412-6,076-3,540
Medium- and long-term654-1,593-3,461-1,667-2,545
Foreign direct investment-31-210-196502-262
Loans received (net)-1,461-2,024-3,890-2,711-2,456
Disbursement2,8633,3792,2152,5323,160
Amortization paid-4,324-5,403-6,105-5,243-5,616
Medium term 2-889-812-788-494-1,166
Long term-2,103-2,799-3,159-2,835-2,680
Commercial credit-1,332-1,792-2,158-1,914-1,771
Amortization received2,312883860823506
Other-166-242-235-281-333
Short-term financial credits1,314569-9472,6345,870
Trade credits-4,751-4,138-8,004-7,042-6,865
Overall balance-1,521637-2,311-721-3,743
Sources: Ministry of Finance, Vneshekonombank, and estimates.

Estimates.

Financial credits.

Sources: Ministry of Finance, Vneshekonombank, and estimates.

Estimates.

Financial credits.

Table I.1.USSR: External Claims of the USSR, 1985-90

(In billions of U.S. dollars; end of year) 1

19851986198719881989Arrears

as of

June 30

1990 2
Total75.595.7121.4127.5138.210.0
In convertible currencies18.522.925.228.67.2
In nonconvertible currencies77.298.5102.3109.62.8
Of which:
Socialist countries340.752.065.767.370.81.4
In convertible currencies0.10.10.10.10.1
In nonconvertible currencies52.065.667.270.71.3
Developing countries34.843.755.760.267.48.8
In convertible currencies18.422.825.128.57.3
In nonconvertible currencies25.232.935.238.91.5
Source: Ministry of Finance.

Converted from rubles to U.S. dollars at the official exchange rate at the end of each period.

Arrears of foreign countries on debt obligations to the USSR. includes unpaid interest.

Socialist countries comprise the CMEA member countries, Albania, the People’s Republic of China, the Lao People’s Democratic Republic, the Democratic People’s Republic of Korea, and Yugoslavia.

Source: Ministry of Finance.

Converted from rubles to U.S. dollars at the official exchange rate at the end of each period.

Arrears of foreign countries on debt obligations to the USSR. includes unpaid interest.

Socialist countries comprise the CMEA member countries, Albania, the People’s Republic of China, the Lao People’s Democratic Republic, the Democratic People’s Republic of Korea, and Yugoslavia.

Table I.2.USSR: External Assets by Debtor Countries at end-October 1989 1(In millions of U.S. dollars)
Of which:
TotalWritten off 2Rescheduled
Total133,11986627,664
Of which:
Socialist countries67,58176815,242
Of which:
Albania12831
Bulgaria689
People’s Democratic Republic of China10
Democratic People’s Republic of Korea3,552664
Cuba23,9973,753
German Democratic Republic175
Hungary990
Lao, P.D.R1,20679
Mongolia14,281913,230
Poland7,8745,021
Viet Nam14,0826462,495
Yugoslavia597
Developing countries64,5389812,422
Of which:
Algeria3,892890
Angola3,0691,221
Afghanistan4,609992
Cameroon1,520453
Egypt2,72113
Ethiopia4,531821,359
India14,163
5,5882,250
Libya2,520573
Nicaragua1,332752
Syria10,35931,578
Yemen Arab Republic1,519453
Yemen, P.D.R2,9191924
Others5,79612964
Source: Ministry of Finance.

Converted from rubles to U.S. dollars at the official exchange rate on October 31, 1989.

Including future interest payments.

Source: Ministry of Finance.

Converted from rubles to U.S. dollars at the official exchange rate on October 31, 1989.

Including future interest payments.

Table I.3.USSR: External Debt and Foreign Exchange Reserves in Convertible Currencies, 1985-90
19851986198719881989June

1990
(In billions of U.S. dollars, end of period)
Long-term credits16.718.120.918.119.922.7
Bank loans(9.9)(11.2)(12.1)(10.9)(13.3)(14.4)
Commercial credits(6.2)(6.2)(7.9)(6.4)(5.8)(7.5)
Official loans(0.6)(0.7)(0.9)(0.8)(0.8)(0.8)
Short- and medium-term financial credits12.213.318.324.934.229.5
Bonds(—)(—)(—)(0.3)(1.4)(1.7)
Medium-term loans(5.3)(5.9)(9.7)(13.4)(15.1)(17.8)
Short-term loans(6.9)(7.4)(8.6)(11.2)(17.7)(10.0)
Total debt28.931.439.243.054.052.2
Foreign exchange reserves 112.914.714.115.314.78.5
(In percent)
External debt, in percent of
GDP 23.12.83.03.03.7
Exports of goods and services 3102111117121139128
Memorandum item:
(In billions of U.S. dollars, end of period)
Total bank loans, by data source:
USSR authorities22.124.530.435.847.543.9
International banking statistics22.829.133.336.944.841.2
Sources: Ministry of Finance, Vneshekonombank, Bank for International Settlements, and estimates.

BIS data.

GDP is converted from rubles to U.S. dollars at the official exchange rate. If a more market-related exchange rate were used, the debt-GDP ratio would be higher.

In convertible currencies.

Sources: Ministry of Finance, Vneshekonombank, Bank for International Settlements, and estimates.

BIS data.

GDP is converted from rubles to U.S. dollars at the official exchange rate. If a more market-related exchange rate were used, the debt-GDP ratio would be higher.

In convertible currencies.

Table I.4.USSR: External Bonds Outstanding, 1988-90 1
End of Period19881989June 30,

1990
Currency of issue
(In millions of units):(In millions of U.S. dollars)2
1988 issues
Swiss francs 10066.564.770.5
Deutsche mark 500280.9294.5299.1
1989 issues
Italian lire 75,00059.061.2
Deutsche mark 1,250736.2747.8
Netherlands guilder 250130.5132.9
Austrian schillings 1,00084.685.1
1990 issues
Deutsche mark 500347.41,369.51,695.7
Sources: Vneshekonombank and estimates.

No bonds were outstanding prior to 1988.

Valued at end-of-period exchange rates.

Sources: Vneshekonombank and estimates.

No bonds were outstanding prior to 1988.

Valued at end-of-period exchange rates.

Table I.5.USSR: External Debt Service Obligations in Convertible Currencies, 1986-91 1(In billions of U.S. dollars)
198619871988198919901991
EstimatesProjections
Long-term bank credits3.63.93.63.54.55.3
Principal(2.8)(3.1)(2.8)(2.7)(2.4)(4.3)
Interest(0.7)(0.8)(0.8)(1.0)(1.0)(1.0)
Commercial credits2.42.82.62.43.86.4
Principal(1.9)(2.3)(2.1)(1.8)(3.1)(5.7)
Interest(0.5)(0.6)(0.7)(0.8)(1.7)(0.7)
Medium-term financial credits0.71.41.21.94.03.6
Principal(0.7)(0.8)(0.5)(1.1)(2.2)(1.7)
Interest(0.6)(0.6)(0.7)(0.8)(1.7)(1.9)
Interest on short-term deposits0.60.60.81.61.20.5
Total7.88.88.29.413.416.9
Principal(5.5)(6.2)(5.4)(5.7)(8.8)(11.7)
Interest(2.4)(2.7)(2.8)(3.7)(4.6)(5.2)
In percent of exports of goods and
services (in convertible currencies)27.726.523.124.233.0
Sources: Derived from data provided by Vneshekonombank.

The projections for 1991 include obligations on external debt projected to be disbursed in 1991. External debt service obligations relate only to debt contracted or guaranteed by Vneshekonombank.

Sources: Derived from data provided by Vneshekonombank.

The projections for 1991 include obligations on external debt projected to be disbursed in 1991. External debt service obligations relate only to debt contracted or guaranteed by Vneshekonombank.

Table J.1.USSR: State Budget Revenue, 1976-90 1(In billions of rubles)
Average19811982198319841985198619871988EstimatePlan
1976-8019891990
Total revenue266.0320.6353.0357.9376.7367.7366.0360.1365.1384.9410.1
(in percent of GDP)(…)(48.7)(50.9)(49.2)(49.6)(47.3)(45.8)(43.6)(41.7)(41.0)(42.8)
Tax revenue199.2235.2253.8262.4274.2337.1335.6342.9340.0361.6387.8
Income taxes and transfers 2103.9119.8130.9136.4147.0148.4159.7158.8154.3157.3168.0
Individual income taxes22.025.526.627.628.830.031.232.535.941.743.5
Income tax20.523.925.026.027.128.329.530.933.937.540.2
Agriculture tax0.30.30.30.30.20.20.20.20.20.20.2
Bachelor/small family tax1.21.31.41.41.41.51.51.41.41.51.5
Patent/other income taxes0.42.51.6
Profit taxes and transfers81.994.3104.3108.8118.2118.4128.5126.3118.4114.6124.5
State enterprises 380.392.4102.4106.6115.6115.9125.9123.4115.6111.4120.4
Profit/income deductions, etc.13.518.819.722.125.330.243.466.761.066.078.8
Fixed payments1.30.35.25.45.50.53.22.20.70.6
Residual profit payments39.145.346.345.949.247.138.512.89.54.8
Wage tax 44.96.23.0
On fixed/working capital26.428.031.233.335.538.140.841.739.533.838.6
Cooperatives and other1.61.91.92.22.62.52.62.92.84.24.1
Collective farms0.70.80.81.01.41.21.21.31.31.61.4
Cooperatives, etc0.91.11.11.21.31.31.41.61.62.62.7
Social insurance contributions12.915.022.323.124.525.426.528.130.133.144.8
Turnover tax82.3100.4100.6102.9102.797.791.594.4101.0111.1121.9
Alcohol30.127.229.133.440.439.0
Other67.664.365.367.670.782.9
Revenue from foreign activity65.657.961.654.659.051.8
Exports33.826.329.424.023.816.0
of which: oil and gas14.011.5
Imports31.231.031.529.934.333.3
Other0.60.60.70.70.92.4
of which: foreign exchange revenue1.0
Tax on motor vehicles1.11.3
Nontax revenue 566.885.599.295.592.530.630.417.225.123.322.3
Geological fees3.73.94.04.14.14.2
Movies1.31.31.41.61.61.5
Forestry0.50.50.80.80.80.80.80.90.80.80.8
Water0.50.50.50.50.50.5
Lotteries0.90.71.31.31.30.30.30.30.30.40.3
Other65.484.297.093.410.424.023.610.117.815.915.0
Source: Ministry of Finance; and estimates.

Data since 1985 are not comparable to those of previous years.

Includes also revenue from sources other than fixed-rate taxes.

Enterprise contributions include geological fees in 1981-84.

Labor resource tax in 1988 and the excess wage fund tax in 1989-90.

Nontax revenue includes revenues from foreign activity and unidentified financing through 1984.

Source: Ministry of Finance; and estimates.

Data since 1985 are not comparable to those of previous years.

Includes also revenue from sources other than fixed-rate taxes.

Enterprise contributions include geological fees in 1981-84.

Labor resource tax in 1988 and the excess wage fund tax in 1989-90.

Nontax revenue includes revenues from foreign activity and unidentified financing through 1984.

Table J.2.USSR: State Budget Expenditure, 1976-90 1(In billions of rubles)
Average19811982198319841985198619871988EstimatePlan
1976-8019891990
Total expenditure260.1309.8343.1354.3371.2386.0415.6429.3445.9465.1485.6
(in percent of GDP)(…)(47.1)(49.4)(48.7)(48.8)(49.7)(52.0)(52.0)(51.0)(49.5)(50.6)
Economy140.4169.8197.3201.8211.7217.2234.1234.0203.1200.1188.2
Investment63.866.471.876.368.042.2
Subsidies3.42.21.91.91.816.8
Operational expenditures13.213.613.012.78.011.8
Price differentials65.873.074.964.366.395.9
Increases in procurement prices21.931.6
Other71.078.972.426.024.421.5
Defense17.217.117.117.117.119.119.120.257.375.271.0
Procurement32.631.0
R & D (including space)15.313.2
Wages and salaries17.217.117.117.117.119.119.120.220.220.219.3
Pensions2.32.4
Military construction4.63.7
Other0.21.3
Justice and internal security5.76.06.26.68.29.6
Administration2.32.62.82.92.93.03.02.93.02.92.9
Science9.010.911.712.713.213.714.412.416.910.111.0
Social and cultural activities80.292.897.8102.1106.4111.9119.3127.6134.3139.3160.5
Education27.930.832.232.434.035.938.142.342.744.549.6
Health and physical cultural13.415.216.016.517.217.618.019.521.924.627.6
Budget of national social insurance14.116.918.020.822.322.823.624.025.525.34.9
Grant to central collective farm insurance3.03.93.93.92.83.14.03.84.14.06.6
Mothers0.30.30.50.50.60.60.60.70.70.8
Social security21.525.727.328.029.631.935.037.340.140.271.0
On account of national social insurance17.320.521.922.624.125.828.730.835.841.2
Other4.25.15.45.45.56.16.36.54.429.8
Lottery0.20.20.20.20.20.2
Foreign economic activity2.24.911.915.615.414.9
Trade subsidies0.91.58.19.79.67.4
Exports0.55.96.76.96.8
Imports1.02.23.02.70.6
Subsidies to industry2.02.12.22.12.3
Unilateral aid1.31.11.72.11.52.0
Interest payments0.81.31.9
Other0.40.80.91.3
Other expenditures11.116.716.417.819.913.014.613.99.113.727.3
Internal interest payments4.55.36.3
Gosbank4.55.36.3
Price diff. on agricultural products0.4
From reserve funds0.44.54.1
USSR Council of Ministers0.41.81.0
Republic Council of Ministers2.22.6
USSR Ministry of Finance0.50.5
Other11.116.716.417.819.913.014.613.94.23.916.9
Source: Ministry of Finance and estimates.

Data since 1985 are not comparable to those for previous years.

Source: Ministry of Finance and estimates.

Data since 1985 are not comparable to those for previous years.

Table J.3.USSR: State Budget Financing, 1976-90 1(In billions of rubles)
Average19811982198319841985198619871988EstimatePlan
1976-8019891990
Overall balance5.910.89.93.65.6-18.3-49.6-69.2-80.8-80.2-75.5
(In percent of GDP)(…)(1.6)(1.4)(0.5)(0.7)(-2.4)(-6.2)(-8.4)(-9.2)(-8.5)(-7.9)
Financing-5.9-10.8-9.9-3.6-5.618.349.669.280.880.275.5
Foreign financing (net)-7.4-8.6-7.1-4.9-4.6-4.0
Drawings5.56.57.78.08.27.9
Amortization-12.9-15.1-14.8-12.9-12.8-12.0
Domestic financing (net)35.866.485.395.397.179.4
Banking system29.463.079.887.589.260.0
Gosbank loan of 198210.519.019.021.019.8
State-wide loan fund6.028.935.566.562.4
Other 212.915.125.35.860.0
Nonbank public6.43.45.57.87.919.4
Liquidation of 1957 loan-1.0-1.0-1.4-1.6
Loan of 1982
(3 percent interest rate) (net) 30.91.40.61.31.71.0
Social security receipts of 1982 loan1.52.62.62.6
Eight-year loan
(10 percent interest rate)10.0
Consumer durable bonds10.0
Residuals from republic budgets4.03.03.33.95.0
Over-financing (-) 4-5.9-10.8-9.9-3.6-5.6-10.1-8.2-9.0-9.6-12.3
Memorandum items:
Union balance-90.0-92.0-64.6
Republics’ balance7.68.5-10.9
Social security balance1.82.8
Sources: Ministry of Finance and estimates.

Data since 1985 are not comparable to those for preceding years.

Ministry of Finance documents identify “other financing” as “state loan for the development of the national economy, distributed among the firms, organizations and banks.”

Includes lottery payments in 1985-88.

Excess of credit plan allocation over required financing.

Sources: Ministry of Finance and estimates.

Data since 1985 are not comparable to those for preceding years.

Ministry of Finance documents identify “other financing” as “state loan for the development of the national economy, distributed among the firms, organizations and banks.”

Includes lottery payments in 1985-88.

Excess of credit plan allocation over required financing.

Table J.4.USSR: Centralized Funds of State Enterprises, 1985-89(In billions of rubles)
19851986198719881989
InflowOutflowYear-end balanceInflowOutflowYear-end balanceInflowOutflowYear-end balanceInflowOutflowYear-end balanceInflowOutflowYear-end balance
Total2.72.71.827.124.99.445.943.09.952.051.911.3
Distribution by fund:
Material incentive fund1.31.30.91.71.41.41.51.31.11.61.61.6
Social, cultural and housing
construction fund0.50.50.41.51.40.81.71.60.71.61.50.9
Production development fund0.70.70.213.813.21.228.327.42.948.948.98.8
Other funds0.30.20.210.28.96.0 114.412.75.2
Distribution by activity:
Industry1.61.61.014.113.42.220.720.22.925.325.24.1
Agriculture0.30.40.25.35.32.79.68.53.98.88.73.6
Transport0.10.20.11.81.60.36.56.10.75.45.50.6
Communications0.80.70.20.70.70.1
State procurement0.10.10.00.00.00.00.20.10.70.60.1
Supply and marketing0.50.5-0.1
Trade0.10.10.12.51.22.03.33.01.03.13.10.9
Personal services0.30.20.10.60.60.10.60.70.20.60.60.1
Municipal services enterprises0.10.10.10.10.00.10.10.10.10.10.1
Scientific organizations0.40.40.1
Construction and assembly organizations0.10.10.22.52.41.73.23.00.85.05.01.2
Source: Goskomstat.

Fund for production and social development (trade); agro-industrial reserve fund.

Source: Goskomstat.

Fund for production and social development (trade); agro-industrial reserve fund.

Table J.5.USSR: Domestic Government Debt Outstanding, 1975-90(In billions of rubles, at end of year)
1975198019841985198619871988EstimatePlan
19891990
I. Bank credit29.270.796.2106.7125.7180.2267.7349.9349.9
Credit against deposits
of the public 129.270.796.2106.7125.7144.7165.7185.5185.5
Free reserves of state loan fund35.5102.0164.4164.4
II. Nonbank debt33.233.132.134.935.639.644.748.8191.0
From insurance funds 15.07.710.111.912.315.318.421.622.2
Debt on account of loans
accumulated before 195723.818.413.412.010.69.69.68.4
1982 loan 14.47.08.611.012.714.716.718.820.5
Loan from cooperatives,
enterprises, etc.60.0
Treasury obligations to public 210.0
Consumer durable bonds10.0
Debt write-off on agricultural
banks/enterprises in 199068.3
III. Official domestic debt (I+II)62.4103.8128.3141.6161.3219.8312.4398.7540.9
IV. Agricultural Price Support Fund11.311.320.530.339.645.0
V. Domestic debt, adjusted (III+IV)152.9172.6240.3342.7438.3585.9
Sources: Ministry of Finance and Gosbank.

At 3 percent interest rate.

At 10 percent interest rate and 10-year maturity period.

Sources: Ministry of Finance and Gosbank.

At 3 percent interest rate.

At 10 percent interest rate and 10-year maturity period.

Table K.1.USSR: Total Domestic Credit, 1980-90(In billions of rubles, end of period)
1980198519861987198819891990

June
1990

Dec.

Proj.
Bank credit to firms342.5519.4450.2427.8398.8383.7385.8367.4
Short-term261.4426.5356.6333.5302.3287.1293.4294.0
Long-term81.192.993.694.396.596.692.473.4
Bank credit to households 10.72.02.43.15.87.48.910.6
Total bank credit to economy343.2521.4452.6430.9404.6391.1394.7378.0
of which: long term81.194.996.097.4102.3104.0101.384.0
(adjusted) 2343.2521.4452.6430.9404.6391.1410.0408.0
Bank credit to government78.2118.0140.6200.7298.0390.1427.9524.9
Ordinary credit70.7106.7125.7180.2267.7350.5385.8474.9
Agricultural credit7.511.314.920.530.339.642.150.0
(adjusted) 378.2118.0140.6200.7298.0390.1392.6454.9
Total bank credit421.4639.4593.2631.6702.6781.2822.6902.9
(adjusted) 4421.4639.4593.2631.6702.6781.2802.6862.9
Government bonds7.011.012.714.416.118.121.223.5
Total domestic credit428.4650.4605.9646.0718.7799.3843.8926.4
(adjusted) 4428.4650.4605.9646.0718.7799.3823.8886.4
Sources: Data provided by the Soviet authorities; and estimates.

Households are granted only long-term credit.

Credit to the economy has been adjusted by adding rub 70 billion in 1990 (35.3 billion in June 1990) on account of loans to the agricultural sector taken up by the Government; rub 20 billion and rub 40 billion for new construction on credit (matched by deposits in escrow accounts) have been subtracted respectively in June and in December 1990.

Credit to the Government in 1990 has been adjusted for the acquisition of bad loans written-off by the enterprise sector (see footnote 2).

Total bank credit has been adjusted by subtracting rub 20 billion and rub 40 billion for new construction credit respectively in June and in December 1990 (see footnote 2).

Sources: Data provided by the Soviet authorities; and estimates.

Households are granted only long-term credit.

Credit to the economy has been adjusted by adding rub 70 billion in 1990 (35.3 billion in June 1990) on account of loans to the agricultural sector taken up by the Government; rub 20 billion and rub 40 billion for new construction on credit (matched by deposits in escrow accounts) have been subtracted respectively in June and in December 1990.

Credit to the Government in 1990 has been adjusted for the acquisition of bad loans written-off by the enterprise sector (see footnote 2).

Total bank credit has been adjusted by subtracting rub 20 billion and rub 40 billion for new construction credit respectively in June and in December 1990 (see footnote 2).

Table K.2.USSR: Growth in Domestic Credit, 1971-90(Annual growth rates in percent)
1971-801981-8519861987198819891990

June
1990

Proj.
Bank credit to firms10.58.7-13.3-5.0-6.8-3.8-2.6-4.2
Short-term9.610.3-16.4-6.5-9.4-5.0-2.22.4
Long-term14.42.80.80.72.30.1-4.0-24.0
Bank credit to households1.523.420.029.287.127.653.443.2
Total bank credit to economy10.58.7-13.2-4.8-6.1-3.3-1.8-3.3
Of which: long-term14.23.21.21.55.01.7-0.7-19.2
(adjusted) 110.58.70.2-4.8-6.1-3.32.04.3
(adjusted and in real terms) 110.67.21.0-5.3-6.8-7.2
Bank credit to government 28.619.242.748.530.926.734.5
(adjusted) 38.619.242.748.530.916.316.6
Total bank credit8.7-7.26.511.211.211.215.6
(adjusted) 48.74.06.511.211.28.510.5
Government bonds 59.515.513.411.812.423.429.8
Total domestic credit8.7-6.86.611.311.211.515.9
(adjusted)8.74.26.611.311.28.810.9
Memorandum items:
Net material product (nominal)4.84.61.52.15.26.8
Net material product (real)4.93.22.31.64.42.5
NMP deflator (implicit)-0.11.4-0.80.50.84.2
Sources: Data provided by the Soviet authorities; and estimates.

The growth rate of credit to the economy in 1986 has been adjusted for rub 71.6 billion of canceled construction credit. Credit to the economy in 1990 has been adjusted by adding rub 70 billion (35.3 billion in June 1990) on account of loans to the agricultural sector taken up by the Government. Rub 20 billion and rub 40 billion for new construction credit (matched by deposits in escrow accounts) have been substracted respectively in June and in December 1990. The NMP deflator was used to compute the growth rate in real terms.

Including agricultural credit.

The growth rate of credit to the Government in 1990 has been adjusted for the acquisition of bad loans written-off by the enterprise sector (see footnote 1).

The growth rate of total credit in 1986 has been adjusted for rub 71.6 billion of cancelled construction credit. The same growth rate in 1990 has been adjusted by subtracting rub 23 billion for new construction credit (see footnote 1).

Including bonds to be paid back in consumer durables.

Sources: Data provided by the Soviet authorities; and estimates.

The growth rate of credit to the economy in 1986 has been adjusted for rub 71.6 billion of canceled construction credit. Credit to the economy in 1990 has been adjusted by adding rub 70 billion (35.3 billion in June 1990) on account of loans to the agricultural sector taken up by the Government. Rub 20 billion and rub 40 billion for new construction credit (matched by deposits in escrow accounts) have been substracted respectively in June and in December 1990. The NMP deflator was used to compute the growth rate in real terms.

Including agricultural credit.

The growth rate of credit to the Government in 1990 has been adjusted for the acquisition of bad loans written-off by the enterprise sector (see footnote 1).

The growth rate of total credit in 1986 has been adjusted for rub 71.6 billion of cancelled construction credit. The same growth rate in 1990 has been adjusted by subtracting rub 23 billion for new construction credit (see footnote 1).

Including bonds to be paid back in consumer durables.

Table K.3.USSR: Growth in Short-Term Credit to Enterprises, 1981-90
Percentage Growth RatesComposition

in Percent
1981-851986-891986198719881989June

1990
1989
By sector:
Industry8.0-8.83.5-13.1-13.8-10.8-3.925.3
Agriculture7.4-2.12.73.0-6.2-7.5-29.926.3
Transports and communication12.1-18.82.2-12.8-43.9-13.059.10.7
Construction19.0-33.1-60.9-31.8-32.6-16.947.67.7
Trade8.9-6.0-11.7-8.90.4-3.321.923.8
Wholesale trade7.31.06.30.8-0.8-2.12.68.0
Procurement of farm products4.1-1.13.68.7-8.0-7.821.73.7
Other13.345.63.6-3.457.1186.4260.04.4
Total10.3-9.4-16.4-6.1-9.7-5.0-0.3100.0
(excluding construction)8.0-4.3-0.7-5.8-6.6-3.9-4.792.3
Source: Data provided by the Soviet authorities.
Source: Data provided by the Soviet authorities.
Table K.4.USSR: Republican Distribution of Bank Deposits and Loans, 1970-89(Percentage composition)
19701980198719881989
(Bank Deposits)
RSFSR60.357.256.957.0
Ukraine19.622.022.222.2
Belorussia3.24.04.44.5
Estonia0.90.70.70.7
Latvia1.31.11.11.1
Lithuania1.52.02.12.1
Moldavia0.61.01.11.1
Georgia2.62.22.12.1
Armenia1.31.31.21.1
Azerbaidzhan1.11.01.00.9
Kazakhstan3.93.83.63.6
Turkmenistan0.40.40.40.4
Uzbekistan2.12.22.12.1
Tadzhikistan0.60.50.50.5
Kirgizia0.60.60.60.6
Total100.0100.0100.0100.0100.0
of which:
rural26.827.025.224.5
urban73.173.074.875.5
(Bank Loans)
RSFSR56.959.059.655.154.8
Ukraine16.815.213.612.912.4
Belorussia2.83.23.63.02.8
Estonia0.50.40.30.30.4
Latvia1.01.00.80.80.8
Lithuania1.21.21.11.11.2
Moldavia1.21.31.21.21.0
Georgia1.61.52.42.32.2
Armenia0.90.81.01.11.1
Azerbaidzhan1.31.22.01.81.8
Kazakhstan5.45.66.56.87.1
Turkmenistan0.80.60.80.80.8
Uzbekistan3.93.64.44.34.2
Tadzhikistan0.80.70.70.70.7
Kirigizia0.90.70.91.01.0
Unspecified3.94.01.76.87.8
Total100.0100.0100.0100.0100.0
Source: Data provided by the Soviet authorities.
Source: Data provided by the Soviet authorities.
Table K.5.USSR: Financial Assets, 1980-90(In billions of rubles, end of period)
19801985198619871988June

1989
1989June

1990
Proj.

1990
Narrow money (M1)198.4276.1297.0343.6396.4416.2453.1464.8514.0
Currency52.670.574.880.691.6100.8109.5119.5133.0
of which: firms1.71.61.81.73.32.84.53.86.1
Demand deposits145.8205.6222.2263.0304.8315.4343.6345.3381.0
Households102.4134.7146.5159.2176.2187.3201.6211.6221.0
Enterprises43.470.975.7103.8128.6127.8142.0133.7160.0
Broad money (M2)262.6377.0409.0469.2535.4561.3614.8643.1708.8
M1 plus:
Time deposits62.695.3104.7116.6128.3133.4149.0164.5179.8
Households52.283.793.5104.5116.1123.4130.5137.0147.8
Enterprises 110.411.611.212.112.210.018.527.532.0
Lottery bonds1.65.67.39.010.711.712.713.815.0
Total financial assets300.1475.8438.0500.0575.1600.7656.6711.3797.2
M2 plus:
Other bank deposits18.774.02.83.210.810.112.236.455.2
Households
Long-term deposits1.92.42.83.25.55.68.48.811.4
Enterprises
Construction funds16.871.65.34.53.827.643.8
Bonds (1957 ser.)5.45.45.45.45.45.45.45.4
Bonds (1990 ser.)2.08.5
Insurance policies13.419.420.822.223.523.924.224.424.7
Households’ assets
M1153.3203.6219.5238.1264.5285.3306.6327.3347.9
M2207.1292.9320.3351.6391.3420.4449.8478.1510.7
Total financial assets227.8320.1349.3382.4425.7455.3487.8518.7555.3
of which:
savings deposits156.5220.8242.8266.9297.8316.3340.5357.4380.2
Sources: Data provided by Gosbank; and estimates.

Including incentive funds of enterprises; technically, these are not time deposits since they could be used for specific purposes without previous notice.

Sources: Data provided by Gosbank; and estimates.

Including incentive funds of enterprises; technically, these are not time deposits since they could be used for specific purposes without previous notice.

Table K.6.USSR: Growth in Financial Assets, 1981-90(Growth rates in percentage)
1981-851986198719881989June

1990
Proj.

1990
Narrow money (M1)6.87.615.715.414.311.713.4
Currency6.06.17.813.619.518.621.5
Demand deposits7.18.118.415.912.79.510.9
Households5.68.88.710.714.413.09.6
Enterprises10.36.837.123.910.44.612.6
Broad money (M2)7.58.514.714.114.814.615.3
of which:
time deposits
of households9.911.711.811.112.411.013.3
Households’ assets
M15.87.88.511.115.914.713.5
M27.29.49.811.315.013.713.5
Total financial assets7.09.19.511.314.613.913.8
of which:
savings deposits7.110.09.911.614.313.011.7
Sources: Data provided by Gosbank; and estimates.
Sources: Data provided by Gosbank; and estimates.
Table K.7.USSR: Financial Assets of Enterprises, 1 1980-90
1980198519861987198819891990 2
Stock at the end of the period
(in billions of rubles)
Narrow money (M1)45.172.577.5105.5131.9146.5166.1
Currency1.71.11.81.73.34.56.1
Demand deposits43.470.975.7103.8128.6142.0160.0
Broad money (M2)55.584.188.7117.6144.1165.0198.1
M1 plus:
Incentive funds10.411.611.212.112.211.216.0
Time deposits7.316.0
Construction funds16.871.65.33.843.8
Total financial assets72.3155.788.7117.6149.4168.8241.9
Memorandum item:
Funds in transfer
between enterprises20.330.942.943.147.068.0
1980-8519861987198819891990
Selected growth rates
M110.06.936.125.011.113.4
M28.95.532.622.514.520.0
Source: Data provided by the Soviet authorities; and estimates.

Including nonprofit organizations.

Projections.

Source: Data provided by the Soviet authorities; and estimates.

Including nonprofit organizations.

Projections.

Table K.8.USSR: Monetary Survey, 1988-90
19891990
1988JuneDec.JuneDec. 1
Monetary assets
Money (M1)396.4416.2453.1464.8514.0
Currency in circulation91.6100.8109.5119.5133.0
Demand deposits304.8315.4343.6345.3381.0
Households176.2187.3201.6211.6221.0
Enterprises128.6127.8142.0133.7160.0
Time deposits128.3133.4149.0164.5179.8
Households116.1123.4130.5137.0147.8
Enterprises12.210.018.527.532.0
Other bank deposits10.810.112.236.455.2
Households’ long-term deposits5.55.68.48.811.4
Enterprises’ construction funds5.34.53.827.643.8
Total monetary assets535.5559.7614.3665.7749.0
Liabilities
Total domestic bank credit702.6740.1781.2822.6902.9
Credit to government298.0338.0390.1427.9524.9
Ordinary credit267.7304.0350.5385.8474.9
Agricultural credit30.334.039.642.150.0
Credit to the economy404.6402.1391.1394.7378.0
Short term (only firms)302.3300.1287.1293.4294.0
Long term102.3102.0104.0101.384.0
Enterprises96.596.692.473.4
Households5.87.48.910.6
Other items (incl. nfa)-167.1-180.4-166.9-156.9-153.9
Interenterprise settlement (MFO) 2-47.0-57.0-68.0-80.0
Interbank settlement-38.8-29.7-14.7-7.9
Settlements through
Ministry of Communication20.5-0.2-0.6-0.1
Budgetary transit accounts-62.9-66.0-59.4-59.4
Other debtors/creditors (+ net credit)6.610.3-6.214.1
Others-45.5-37.8-18.0-23.6
of which: estimated net foreign assets-35.0-37.1-41.5-43.5
Sources: Data provided by the Gosbank; and estimates.

Figures for December 1990 include the write off of agricultural debt (rub 70 billion) and the repayment by Gosbank of rub 5.46 billion on account of outstanding bonds issued in 1957.

The figures for June 1989 and 1990 are estimates.

Sources: Data provided by the Gosbank; and estimates.

Figures for December 1990 include the write off of agricultural debt (rub 70 billion) and the repayment by Gosbank of rub 5.46 billion on account of outstanding bonds issued in 1957.

The figures for June 1989 and 1990 are estimates.

Appendix II-2 Statistical Issues

1. INTRODUCTION

As a country’s economy evolves, it typically finds that it must adapt its statistical system to meet changing circumstances. Nowhere is this phenomenon more apparent than in the USSR. Reform initiatives in the 1980s have underscored problems with the existing statistical system, and created a demand for new indicators and methods of gathering data. These initiatives have prompted major changes in Soviet statistical work that can be expected to continue as the USSR undergoes further reform. The purpose of this appendix is to provide an overview of the Soviet statistical system, evaluate the reliability of selected indicators it produces, and suggest areas in which changes might prove fruitful. It should be noted at the outset that its objective is not to dwell on the problems with Soviet statistics. The existence of some degree of error is normal in statistical work, and Soviet statisticians were fully prepared to discuss these problems. It is also true, however, that an understanding of the systematic biases of Soviet statistics is essential to the analysis of current economic developments.

As regards the future, it is clear that changes to both the accounting systems used in enterprises and in government statistics would help accelerate the transition to a market economy. Efficient decentralization of decision-making will take place only if managers and investors have a full and fair view of an enterprise’s financial performance. Achieving this will require the implementation of uniform accounting standards, training in these new concepts, auditing of accounts to ensure that the standards are being met, and the dissemination of audited accounts for use by shareholders, creditors, and supervisory authorities. Just as improved accounting systems are a prerequisite for efficient microeconomic decisionmaking, so are improved macroeconomic statistics necessary for improved policy formation. Converting the balance of payments from a settlements basis—which excludes transactions related barter trade, gold exports and trade credits—to a transactions basis would provide a more comprehensive picture of the USSR’s external position. Adapting the national accounts to the SNA framework and revising the methodology used to calculate implicit price deflators for these accounts would permit a more accurate measurement of real growth. Introducing comprehensive measures of unemployment and modifying the methods used to calculate retail and wholesale price indices would provide a clearer picture of the social impact of policy changes. Soviet authorities have already sought outside advice in some of these areas; further technical assistance could play an important role in promoting the transition to a market economy.

2. OVERVIEW OF THE SOVIET STATISTICAL SYSTEM

a. Organization of the statistical system

Although the Soviet statistical system is relatively centralized, there are no fewer than five organizations involved in statistical work. The chief coordinator is the State Committee on Statistics (Goskomstat USSR), but as shown in Chart 1, it shares the responsibility for statistical collection with several other agencies. Banking, monetary, and budgetary statistics are compiled by the Ministry of Finance, although the source of most financial and balance of payments statistics is Gosbank. Statistics on crime, corruption, alcoholism, and other social problems are the domain of the Ministry of Internal Security. Until 1989, foreign trade statistics were the exclusive responsibility of the Ministry for Foreign Economic Relations (MVES). Although many of these data are now compiled directly by Goskomstat, this ministry continues to gather a number of important external sector statistics, as does Vneshekonombank. Finally, the Ministry of Defense maintains all statistics on military production and other defense-related activities.1

Chart 1.USSR: INSTITUTIONAL RESPONSIBILITIES IN STATISTICS

The sources of data for statistics on the domestic economy, external sector, fiscal accounts, and money and credit are summarized in Chart 2. Given that it requires specialized expertise to compile many of these series, it is not surprising that a few institutions are the sole providers of certain statistics. The degree to which access to a given organization’s statistics is restricted, however, is surprising. For example, Goskomstat has a legitimate interest in acquiring data on net factor income from abroad to compile GNP statistics for the USSR, but has yet to obtain these data from the other agencies. As a result, its GNP statistics exclude net factor income from abroad and therefore are actually GDP figures, though no statistical compendia mention this. Similarly, one cannot go to a single ministry for a composite picture of external settlements, although this would seem to be of interest to a variety of Soviet organizations in carrying out their official activities.

Chart 2.USSR: SOURCES OF DATA BY SECTOR

Goskomstat, the central coordinator of statistical work in the USSR, has evolved a highly structured internal organization to compile the data for which it is responsible. As shown in Chart 3, the national office is organized into 14 sectoral departments and divisions, with five affiliated organizations that cut across sectoral lines. Administrative regions at the union republic level and below each have their own Goskomstats, which serve as the link between the national headquarters and reporting units within each enterprise and collective farm. The organization of these regional statistical offices parallels that of the national office, although they are subordinate not only to Goskomstat USSR but to regional administrative authorities as well.

Chart 3.USSR: ORGANIZATION OF GOSKOMSTAT

Glavlit, the state censorship office, is not formally part of the national statistical network, but has nonetheless played an important role. By forbidding publication of articles containing statistics not authorized by the central statistical authorities, it traditionally controlled the dissemination of information on the Soviet economy. Glavit’s degree of control, however, has been reduced. For example, since 1987 Soviet scholars have been able to publish growth rates that differ from official statistics. Legislation has been introduced that would restrict the scope of state censorship.2

b. The role of statistical agencies

Soviet statistical agencies provide indicators of macroeconomic performance, as do their western counterparts. They are also expected, however, to serve as a mechanism for monitoring plan fulfillment by individual enterprises. This latter role has given rise to several notable characteristics of the Soviet statistical system, which include the following:

(1) Complete enumeration preferred to sample surveys

The success of enterprises in meeting plan targets cannot be assessed unless data are gathered for all relevant establishments. The practice of compiling statistics based on comprehensive reports filled out by each firm is at considerable variance with western methods of data collection, which are based primarily on sample surveys.

(2) Large statistical workforce

Monitoring individual enterprise performance is labor intensive. For example, to process the forms it receives, Goskomstat currently employs 27,000 persons—down from 41,000 employed as recently as 1987. By contrast, approximately 13,000 full-time employees are involved in federal statistical work in the United States (where sample surveys predominate).3 The relatively high employment figures reflect not only the practice of gathering data via complete enumeration, but also the poor quality of much of the available data processing equipment. This frequently necessitates hand tabulation of many indicators.

(3) Emphasis on data processing over data analysis

Given finite resources and the plethora of reports submitted by individual enterprises, the attentions of Goskomstat and other Soviet statistical organizations have traditionally been focused on data processing rather than data analysis. Statistics thus tend to be gathered in a manner that facilitates easy compilation, though not necessarily easy interpretation or use.

(4) Incentives to distort

Because bonuses have generally been paid upon proof of plan fulfillment, enterprises have had a strong incentive to exaggerate their performance. Goskomstat maintains a large force of investigators to audit reports, but falsification is still widespread.4 Soviet analysts estimate that exaggerated reporting inflated output by three percent on average during the late 1980s, but was as high as 25 percent for some raw material sectors.5 It is not possible to judge whether the incidence of inflated reporting has risen over time. To the extent that reforms have substituted state orders and autonomous direct contracts among enterprises for planning norms, there are now fewer output targets and thereby fewer incentives to falsify production levels.

c. Reform and the statistical system

The glasnost’ and perestroika campaigns had a delayed impact on the Soviet statistical system.6 The campaign for change began in earnest in 1987, following the publication of an unprecedented series of challenges by Soviet scholars regarding the accuracy of official statistics.7 Soviet authorities responded to these criticisms in 1987 by mandating a restructuring of the country’s statistical system.8 In the following months, the former Central Statistical Administration (TsSU) was renamed Goskomstat, and elevated to state committee status. Indicators that had been omitted from existing yearbooks for decades were restored, the Information and Publishing Center was created, and many new, sector-specific statistical handbooks were published. Concerted efforts were made to increase Soviet participation in international statistical conferences, and a new director for Goskomstat was appointed in 1989 to oversee the continuation of reform initiatives.

While these measures represent a substantial change from past practices, many problems remain. Goskomstat still monitors fulfillment of plan targets, and the systemic problems that role engenders (noted above) continue to be in evidence. The statistical agency’s work force has been reduced by a third at a time when increasing demands are being made of its services. Finally, there is still widespread uncertainty regarding various methodological approaches and the quality of many macroeconomic indicators. The following sections review selected statistical issues regarding the domestic economy, the external sector, the fiscal accounts, and the banking system.

3. DOMESTIC ECONOMY

a. National accounts

Most of the criticism of Soviet economic statistics has been directed at its national accounts. The problem most frequently noted is that real growth rates for these accounts are upwardly biased by the failure to account fully for inflation. But there are also problems of coverage, undocumented changes in methodology, and distortions imposed by the economic system, all of which complicate comparisons of Soviet national accounts statistics with those from other countries as well. Each of these issues is discussed below.

(1) Problems of coverage

Traditional Soviet national accounts are prepared in accordance with the System of Balances of the National Economy (MPS). This means that unlike the national accounts of most countries (which are prepared according to the U.N. System of National Accounts (SNA)), Soviet accounts exclude depreciation and the output of most so-called nonmaterial services.9 Levels of output implied by traditional Soviet indicators, such as national income produced (hereafter referred to as net material product, or NMP), therefore understate the true level of economic activity.

An additional consequence of adopting the MPS accounting framework is that final expenditure statistics cannot be easily used to check the accuracy of NMP calculated on a sector of origin basis. National income utilized—the final expenditure equivalent of NMP—is simply the sum of consumption and accumulation. It is thus a measure of domestic absorption rather than total final expenditure, and differs from NMP whenever the combined net exports and loss figure it excludes is not zero.10 Although Goskomstat has all the elements needed to conduct a consistency check between NMP and national income utilized (see Table A.2 of Appendix II-1), it is unclear whether or not such checks are regularly used by Goskomstat to assess the reliability of the national accounts. But it is clear that no explicit allowance is made for statistical discrepancy, meaning in effect that all errors and inadvertent omissions are buried within national income utilized or “losses”. Finally, the net export figure is defined differently than under the SNA system. Rather than simply valuing net exports at border prices, which would be the standard SNA practice, Goskomstat multiplies the valuta trade balance by an average export conversion factor if the trade balance is positive, and by an import conversion factor if it is negative.11 This practice introduces a bias in the calculation of one or more of the components of the national income accounting identity whenever the valuta trade balance is nonzero and the conversion factor is different from unity. The degree of bias, given the differences between domestic and valuta prices, may not be negligible.12

Goskomstat has moved in recent years to address these coverage problems by also compiling national accounts estimates on an SNA basis.13 As shown in Table 1, gross national product (GNP) statistics produced on this basis to date have been built up from NMP data using translation keys, although corresponding GNP estimates have been developed from the expenditure side that are fully consistent with these figures.14 While broader in scope than traditional NMP statistics, these GNP estimates are not without problems. On the one hand, Goskomstat has been unable to obtain statistics on net factor income from abroad. This means that their GNP estimates are effectively gross domestic product (GDP) figures, and would generally be different if net overseas income were taken into account. On the other hand, the difference between NMP and GDP—40 percent in 1989—is much larger than for Eastern European economies,15 suggesting that GDP estimates may be overstated.

Table 1.USSR: Derivation of Official Gross Domestic Product Statistics, 1985-1989(Billion rubles, in current prices)
19851986198719881989 1
Net Material Product Produced579587600631674
Plus: Wages and salaries of organizations in the nonproductive sphere (including income from private activities, less income of domestic servants)99103108121143
Plus: Social insurance allocations in the nonproductive sphere678810
Less: Funds for business travel in the material production sectors77666
Plus: Profits less subsidies in the nonproductive sphere66444
Less: Nonmaterial services performed by material production sectors, and expenditures by these sectors on social-cultural services and entertainment4039404251
Plus: Depreciation in both spheres139148157166174
Less: Losses of material stocks56678
Gross Domestic Product777799825875940
Source: Goskomstat.

Provisional.

Source: Goskomstat.

Provisional.

The largest part of this difference is depreciation, which in the Soviet case includes both capital renovation and capital repair. The latter is generally regarded as an intermediate expense in western countries, and excluded from the GDP accounts. Soviet statisticians justify its inclusion by noting that depreciation rates for renovation are so low that capital repair must be used by enterprises to prolong the life of not fully depreciated equipment. There is some appeal to this argument: Soviet GDP statistics imply an aggregate depreciation rate of only six percent (including the capital repair adjustment), which is quite low by international standards.16 Even after including capital repair, this low depreciation rate might lead one to conclude that depreciation is underestimated in the national accounts. Offsetting this, however, is the immense capital stock base to which the relatively low depreciation rates are applied. This base may owe its impressive size at least in part to valuation problems, which could in turn impart some upward bias to depreciation.17 In addition, it is difficult to justify the inclusion of all capital repair as true depreciation, for only a portion is devoted to extending the life of the existing capital stock. It is possible that the upward bias imposed by valuation problems and inclusion of capital repair is roughly compensated by the downward bias introduced through the use of relatively low depreciation rates. This would yield reported depreciation figures that are close to their true values, though further study would be necessary to draw firm conclusions.

Finally, it is important to note that neither the NMP nor GDP statistics compiled by Goskomstat take into account levels of activity in the “second,” or shadow economy. Estimates of gross output in the shadow economy vary considerably, with Goskomstat estimating a figure of rub 70 billion, and the Chairman of the Soviet KGB maintaining that it is closer to rub 150 billion.18 Even if only half of these estimates represent undocumented value-added, they would imply that official GDP statistics are understated by 4 to 8 percent. While figures such as these are quite rough, they are consistent with other estimates of the output of the shadow economy, and highlight continuing problems of coverage in Soviet national accounts 19—a problem also noted in the national accounts of western countries.20

(2) Methodological uncertainties

Methodological changes to Soviet national accounts are not always well documented. At worst, this can allow unflattering economic results to be concealed. A recent example of this was the revelation that the statistical authorities had originally excluded declining alcohol sales from the national accounts for 1985 and 1986 to boost artificially rates of aggregate growth.21 At best, incomplete documentation still has the potential to mislead users of data, even if that is not the intention. For example, one methodological problem not publicly documented concerns the valuation of inventories in calculating stockbuilding. Soviet statisticians apparently make no adjustments for inflation in inventories when calculating changes in stocks. During periods of low inflation this has little effect on national income utilized, but as prices increase, the consequent rise in inventory values imparts an upward bias to national income accounts.22 This problem could seriously distort measurement of economic activity in the USSR if controls on prices were lifted as part of economic reforms.

There are also problems in defining stockbuilding. For example, besides net fixed investment (“accumulation of basic funds”), the accumulation component of national income utilized includes (1) accumulation of “material circulating means” and (2) accumulation of “reserves and other expenditures” (Table C.7, Appendix II-1). According to Goskomstat, the change in unfinished construction is included in the first category—under the “change in material circulating means” in the construction sector—although in many countries it is customary to include changes in certain types of unfinished construction (structures, highways, and rail lines) in net fixed investment.23 The second category includes changes in inventories in the defense sector and in those held by the government in connection with disaster relief programs. In Chapter II.2, the two categories together are taken to be equal to “stockbuilding,” as conventionally defined.

It should be noted, finally, that there remains uncertainty regarding the scope of coverage of the defense sector in the Soviet national accounts. Available budget figures on defense procurement24 are broadly consistent with the accumulation of “reserves and other expenditures” component of national income expended, which would seem to make sense because, as noted, the latter apparently consists primarily of changes in defense sector inventories. This consistency could be misleading, however, for some western analysts have suggested that the budget figures may not include all defense expenditures.25 On the production side of the national accounts, Goskomstat has indicated that NMP includes the earnings of defense workers previously omitted from the employment rolls (see section 3.d). Some wage data suggest that these defense workers may be included in the nonproductive sphere, meaning that their earnings would be included in GDP, but not necessarily in NMP. Further information is necessary to draw firmer conclusions on the extent of defense sector coverage in the USSR’s national accounts.

(3) Distortions imposed by the economic system

The fact that the USSR is a planned economy has traditionally made interpretation of its national accounts problematic. Foremost of the difficulties imposed by the economic system are problems of valuation. As resources have traditionally been allocated by plan rather than market, most prices in the USSR are set administratively. This means that national accounts are valued at prices that do not necessarily reflect consumer preferences, and increases in NMP or GDP may thus not indicate an improvement in consumer welfare. In addition, the sectoral composition of value-added is distorted by the presence of large turnover taxes and subsidies.26 Finally, comparisons of output per capita with other countries are complicated by vast differences in relative prices, as well as the absence of a market-clearing exchange rate to convert Soviet national accounts into dollars.

These problems of valuation have been the driving force behind western estimates of Soviet GNP, most notably the “adjusted factor cost approach.”27 They are, however, not the only distortions introduced by the economic system. For instance, as already noted, considerable rewards have accrued to enterprises reporting fulfillment of their economic plans, providing an incentive for these firms to exaggerate their output.

(4) Biased rates of growth

Few indicators have been singled out for greater criticism than the official real growth rates for NMP. Soviet critics maintain that official growth rates are overstated because of inadequate accounting for inflation.28 Soviet growth rates are calculated in “comparable prices,” which until 1989 were simply official list prices.29 Since list price increases associated with the introduction of new or improved products were not regarded as inflationary (even if there was no actual improvement in product quality), price deflators implicit in “comparable price” rates of growth for NMP tended to underestimate actual inflation, and therefore overstated official growth rates.30

How large is this bias? Official NMP growth rates for 1966-85 averaged 5.3 percent, compared to much lower alternative estimates by Soviet analysts ranging from 2.2 to 2.9 percent.31 Researchers at the USSR Institute of World Economy and International Relations have recently estimated that real growth in NMP between 1913 and 1987 was approximately one-third the official rate.32 Soviet scholars have gone as far as to use CIA estimates of real growth in Soviet GNP to suggest that official growth rates are twice as high as actual growth.33 In an even more unusual turn, Goskomstat has used CIA estimates of real growth to call into question the reliability of even lower growth rates set forth by Soviet critics.34

While these alternative estimates of real growth should be regarded with caution, the message they send is unmistakable. Official growth rates are upwardly biased because inflation has not been accounted for fully. The only point of contention is the magnitude by which growth has been overestimated. Goskomstat has sought to address these problems by introducing an improved method for calculating real growth rates in 1990 (for 1989 data). This involves the calculation of actual NMP deflators, which are reportedly developed according to international standards on the basis of changes in prices of a representative sample of commodities. Conceptually, this is a departure from earlier practices, where real rates of growth were derived by first literally calculating output in comparable prices—a complicated procedure that led to the problems outlined above. To the extent that better efforts are now made to account for inflation, this is a welcome change.

b. Price indices

Official price indices that are used simply to monitor price developments in the economy have also come under fire.35 Problems with Soviet price indices are threefold. First, there are problems of availability. While a retail price index has been compiled for decades, an agricultural procurement price index has been calculated only since 1984, compilation of a wholesale price index was resumed only in 1988 after a 10 year hiatus, and a price index for services did not exist until 1990. Significantly, the USSR still has no true consumer price index (with weights drawn from household budget surveys rather than retail trade statistics), although income-indexing called for in some reform plans would require such an index.36

Second, there are problems of measurement. Prior to 1989, the retail price index was not particularly good in picking up so-called hidden inflation, that is, inflation associated with the introduction of new models or quality improvements. If a product in the sample was upgraded or a new model introduced, standard practice was simply to ignore price increases that were accompanied by the supposed increase in product quality. It is widely believed, however, that in many cases these price increases could not be fully justified by quality changes. The official price index thus failed to account for a fairly pervasive form of inflation in the USSR. Goskomstat introduced changes in 1989 aimed at capturing this so-called hidden inflation.37 The improved price index for that year shows a rate of inflation of 2.0 percent—a full 1.5 percentage points higher than would have resulted from simply assuming all so-called qualit