Economic Woes Seen Rising in Ex-Soviet States

As recently as late January, Russia’s Central Bank had only $12 million in hard currency reserves, which would have been less than enough to pay for three days’ worth of imports if Western sources had not been extending billions in credit for food and other badly needed goods.

That statistic and others released Friday by the International Monetary Fund have provided the West with its first hard look at the state of the economies of some of the former Soviet republics.

The figures appear to confirm what outside analysts have been able to gather anecdotally and from government sources in the former Soviet Union--that an already dire economic situation is rapidly getting worse.

In Russia, for example, last year’s 8% decline in industrial production accelerated to 13.5% during the first two months of 1992. Russian consumers, already struggling with retail prices that had almost doubled in 1991, saw them increase more than threefold in January, when the government lifted prices controls in most areas.

Yet IMF specialists noted promising signs as well. By February, the price increases had slowed dramatically, to about 40% for the month, and supplies of many once-scarce goods were increasing.

Under Communist rule, the Soviet Union often criticized the IMF for the harsh austerity measures that it imposes on developing countries seeking its aid.

But since last September, all 15 former Soviet republics have applied for membership in the IMF, and it is now expected to be a leading source of aid for those that can present credible economic reform programs. Russia may be granted membership as early as next week, when the fund and its sister organization, the World Bank, hold their spring meetings in Washington.

To receive IMF assistance, the former Soviet republics have been required to open their economies to outside scrutiny to a degree that would have been unthinkable before the collapse of communism. Since September, IMF specialists have been providing policy advice and collecting data in all 15 of the former republics, including the Baltic states of Lithuania, Latvia and Estonia.

The release Friday of reports on Russia and Ukraine, as well as an overview of the region’s economic performance last year, were the first in a series the IMF plans to make public over the next few weeks.

According to the IMF report, Ukraine’s economic situation appears somewhat less severe than Russia’s. Agricultural production, a major resource, fell by 4.2% last year, an improvement over the 7% reduction in 1990. At the same time, however, industrial output was down by 13% in 1991, after holding almost steady the previous year.

The analysis is the basis for an announcement Wednesday by IMF Managing Director Michel Camdessus that the 15 new nations are likely to need well over $100 billion in each of the next four years. The figure was significantly higher than many earlier estimates.

That funding, Camdessus said, must come from a variety of sources, including the IMF, World Bank, industrial countries and private investment.

The United States and Germany have announced that the world’s seven leading industrial countries are putting together a $24-billion aid package for Russia this year. In addition, Camdessus said, the remaining republics will need another $20 billion.

His announcement came as a surprise to some and is already meeting resistance among potential donors. The Reuters news agency quoted a senior Japanese official as saying that it is pointless even to discuss the additional $20 billion, because earlier aid has not yet been disbursed.

“The failure to implement the aid agreed previously is mostly due to lack of a solid structure in the former Soviet Union to receive such aid,” the official said.