One of the major arguments forming the basis of President Yeltsin's electoral platform in the current presidential elections is the claim that his government's economic reform has started to bear fruit, and that if he is given the chance to continue this reform, the Russian economy will experience significant growth as early as next year.
The graphs on the following pages provide an analysis of the dynamics of change of some major indicators of Russian economic and social performance in the post-Soviet period. These graphs show that although the Russian economy has yet to experience any growth, post-July 1994 industrial production has stayed at the relatively stable level of approximately 50% of its 1990 level. Another credit to Yeltsin's government is that it has managed to reduce the inflation rate significantly: the annual growth of the consumer price index in 1995 and the first 4 months of 1996 was lower than in the last Soviet year (1991). In early 1995 the Russian government also managed to revert the negative tendency in foreign trade: since then Russia on average has had a large positive foreign trade balance.
However, despite these significant achievements, there has been no improvement in Russia's overall economic performance. Industrial stabilisation has not yet led to any significant growth, and the lower rate of inflation has failed to boost investment. Moreover, the above-mentioned achievements of the Yeltsin government are counterbalanced by negative developments in other areas. Thus, the state budget deficit was over US$10 billion in 1995 (and already reached more than half of this amount during the first 5 months of 1996, with election manoeuvring well under way); in early April 1996 wage arrears stood at US$ 4.5 billion (which, in average salary terms, is equivalent to 45% of those employed in the Russian economy not receiving one monthly payment); and by early March 1996 non-payments by Russian enterprises to suppliers of materials and goods reached the astronomical figure of US$ 28 billion.
Yeltsin's reforms have also led to a significant increase of social tensions. In 1995 about 26% (30% in May 1996) of the over-all population had gross incomes below the official poverty line ("living wage"), as compared to 2-5% of the population living below the poverty line in the early 1990s, when the reforms were started. Those employed have also experienced a substantial drop in their real incomes: while in 1991 the average salary in Russia was 4.7 times higher than the official poverty line, by 1995 it had shrunk to only 2.2 times higher.
These facts show that those successes recently achieved by Yeltsin's government in implementation of its reform program have come at grave social and economic costs which may have ruinous consequences for the economy and the reform process itself, as well as Yeltsin's own political future. Even if Yeltsin manages to survive the current election, it is unlikely that he will be able to continue to mask Russia's heavy burden of unsolved economic and social problems by partial reform successes.