Abstract
As a group, the Baltics, Russia, and the other countries of the former Soviet Union have made significant progress in convertibility, foreign exchange market development, and central bank foreign exchange operations over the last five years. Virtually all these countries have made significant progress toward external current account convertibility (Table A4). Armenia, the Baltics, Georgia, Kazakhstan, the Kyrgyz Republic, Moldova, Russia, and Ukraine have removed restrictions on payments and transfers for current international transactions and have accepted the obligations of Article VIII of the IMF’s Articles of Agreement.21 In Armenia and Tajikistan, current (and capital) transactions are in practice virtually free of restrictions, and the authorities of Armenia intend to accept Article VIII status in 1997. Azerbaijan also intends to remove some remaining restrictions on current account transactions in accepting Article VIII. The Baltics, Georgia, and the Kyrgyz Republic have abolished controls on capital transactions, while Kazakhstan, Moldova, and Russia maintain limited controls, and Azerbaijan and Ukraine continue to restrict capital movements. By contrast, little progress has been made toward either current or capital account convertibility in Belarus, Turkmenistan, and Uzbekistan; indeed, during 1996–97, Belarus and Uzbekistan reintroduced exchange restrictions for current international transactions. A general pattern of direct government intervention in the foreign exchange market has been a common feature in these countries. Moreover, all three countries maintain strictly enforced controls on capital flows.
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