The External Debt Crisis of the 1990s

Abstract

Russian external debt has played a very important role in its recent history. At the beginning of the 1990s the Soviet Union found itself in a severe debt crisis that caused the bankruptcy of the state and the collapse of its planned economy. To a large extent the external debt crisis was caused by strategic mistakes made by the Soviet authorities over the course of the previous two decades. This crisis dictated the course of economic development of Russia in the 1990s and the current decade. The debt burden was unbearable for the country in deep distress, and a rescheduling of debt was inevitable as the only possible and civilized way to solve the problem. When the market reforms began in 1992, the external debt became the subject of comprehensive negotiations with western governments. The process was aimed, above all, at achieving support for market reforms in the new Russia.