russia ... 1991
soviet union has collapsed . all 19 states have either declared independence /in process of leaving USSR. there is chaos. economy is in a free fall and the armed forces are thinking to sell their nuclear weapons for cash .
boris yeltsin( president ) decides to go to IMF and agrees on a principle deal called the Washington consensus .
basically, it was an economic shock therapy wherein russia transitioned rapidly from centrally planned soviet model to 'free' mkt..
the result.. .complete chaos...
Yeltsin's program of radical, market-oriented reform came to be known as a "shock therapy". It was based on the policies associated with the Washington Consensus, recommendations of the IMF and a group of top American economists, including Larry Summers. The result was disastrous, with real GDP falling by more than 40% by 1999, hyperinflation which wiped out personal savings, crime and destitution spreading rapidly. This was accompanied by a drop in the standard of living, including surging economic inequality and poverty,along with increased excess mortality and a decline in life expectancy.
The majority of state enterprises were privatized amid great controversy and subsequently came to be owned by insiders for far less than they were worth. For example, the director of a factory during the Soviet regime would often become the owner of the same enterprise. Under the government's cover, outrageous financial manipulations were performed that enriched a narrow group of individuals at key positions of business and government. Many of them promptly invested their newfound wealth abroad producing an enormous capital flight.
Difficulties in collecting government revenues amid the collapsing economy and a dependence on short-term borrowing to finance budget deficits led to the 1998 Russian financial crisis.
In the 1990s Russia was "the largest borrower" from the International Monetary Fund with loans totaling $20 billion. The IMF was the subject of criticism for lending so much as Russia introduced little of the reforms promised for the money and a large part of these funds could have been "diverted from their intended purpose and included in the flows of capital that left the country illegally
https://en.wikipedia.org/wiki/Economy_of_Russia#Transition_to_market_economy_(1991–98)
salient features of the IMF russia deal were ;-
1. ruble to be free floated
2. SOEs to be privatized
3. end subsidies
4.broaden tax net
( ^^ see similarities with pak IMF deal)
i was watching an interview of putin on youtube where he said that IMF even asked yelsin to privatize Russian strategic assets like MiG ,sukhoi and some nuclear missile plants . it was later found that certain western(US) companies were lobbying to buy them via frontmen oligarchs ...
i can see a very similar and worrisome development here in pakistan under this 'shock therapy ' and IMF loan
--------------------------------
