ndering Russian firms have already had
to put another 4.8 million workers on involuntary, unpaid leave or
shortened workweeks. Government fears of large-scale unemployment
continued to hamper industrial restructuring efforts. According to
official Russian data, real per capita income was up nearly 18% in
1994 compared with 1993, in part because many Russians are working
second jobs. Most Russians perceive that they are worse off now
because of growing crime and health problems and mounting wage
arrears. Russia has made significant headway in privatizing state
assets, completing its voucher privatization program at midyear 1994.
At least a portion of about 110,000 state enterprises were transferred
to private hands by the end of 1994. Including partially privatized
firms, the private sector accounted for roughly half of GDP in 1994.
Financial stabilization continued to remain a challenge for the
government. Moscow tightened financial policies in late 1993 and early
1994, including postponing planned budget spending, and succeeded in
reducing monthly inflation from 18% in January to about 5% in July and
August. At midyear, however, the government relaxed austerity measures
in the face of mounting pressure from industry and agriculture,
sparking a new round of inflation; the monthly inflation rate jumped
to roughly 15% per month during the fourth quarter. In response,
Moscow announced a fairly tight government budget for 1995 designed to
bring monthly inflation down to around 1% by the end of 1995.
According to official statistics, Russia's 1994 trade with nations
outside the former Soviet Union produced a $12.3 billion surplus, up
from $11.3 billion in 1993. Foreign sales - comprised largely of oil,
natural gas, and other raw materials - grew more than 8%. Imports also
were up 8% as demand for food and other consumer goods surged. Russian
trade with other former Soviet republics continued to decline. At the
same time, Russia paid only a fraction of the roughly $20 billion in
debt that came due in 1994, and by the end of the year, Russia's hard
currency foreign debt had risen to nearly $100 billion. Moscow reached
agreement to restructure debts with Paris Club official creditors in
mid-1994 and concluded a preliminary deal with its commercial bank
creditors late in the year to reschedule debts owed them in early
1995. Capital flight continued to be a serious problem in 1994, with
billions