The Russian Economic Barometer market situation tests, estimates, forecasts Vol.VII, №2 Spring’ 98 Russian Academy of Sciences Institute of World Economy and International Relations 23 Profsoyuznaya St., Tel. (7-095) 128 8105 GSP-7, Moscow, Russia Tel/fax (7-095) 120 8328 E-mail: [email protected] Fax (7-095) 310 7027

BUSINESS PERFORMANCE State vs Non-state Producers: Which Are Performing Better? ...... 3 Evaluation of Structural Unemployment in Russia ...... 13 Privatisation and Enterprise-owned Social Assets...... 18

STUDYING TRANSITION Barter and Clearing Schemes: How to Define Basic Concepts .... 39 On Types of Barter ...... 45

OFFICIAL DOCUMENTS: SUMMARY & COMMENTS List of official documents on privatisation and change of ownership forms in Russian Federation ...... 48

SURVEY STATISTICS Survey outlines ...... 65 Clarification to the series ...... 69 REB indexes ...... 72 INIOR-HSE indexes ...... 85 Chronological List of Articles by Subject ...... 102

EDITORIAL BOARD

Chief Editor S.Aukutsionek A.Batyaeva R.Kapeliushnikov

English Editors M.Baskakova, L.Ivanova, E.Leontieva

Production Editor G.Churkina

Acknowledgements to T.Serzhantova, N.Dyomina, A.Ivanova, A.Zabelin, I.Bashirova, X.Netschajewa, A.Skripko, A.Pryadko

Technical or financial assistance was provided by:

Russian Academy of Professional Training for the Agricultural-Industrial Complex (B.I.Shaitan),

«AGROCONT» Association (A.Matveyev),

Institute of the World Economy and International Relations of the Russian Academy of Sciences,

Society for Global Social and Economic Integration, United Kingdom, ifo Institute of Economic Research,

Centre for International Research on Economic Tendency Surveys, Ciret Office

«The Russian Economic Barometer» is published four times a year.

©1998, «The Russian Economic Barometer» (Russia). All rights reserved. No part of this issue may be reproduced or transmitted in any form or by any means without the prior permission of the editorial board.

ISSN 0202-179X BUSINESS PERFORMANCE

STATE VS NON-STATE PRODUCERS: WHICH ARE PERFORMING BETTER? A. Batyaeva

1. Introduction Better enterprise performance was one of the main purposes of privatization in Russia. However, surveys carried out so far, as a rule, do not allow to conclude that a breakthrough has already happened and that enterprises in the non-state sector are performing better than in the state sector. Nor are such expectations confirmed by the studies conducted by REB earlier (1, 2). Nevertheless, we should note that most of the former results were based on a direct comparison of business accounts in the two sectors, and, in this respect, are rather rough. They demonstrate that non-state enterprises give no evidence of superior performance. But may there be any more subtle and not yet noticeable indications of changes? Some confirmation may be found in (3), where a special method (distinguishing a dominant owner) was used to prove that there were some differences in performance between enterprises of different types. In the present study we make an attempt to find out differences between the two sectors of economy examining the question from another point of view: we are trying to apply finer and more correct measurement of performance, taking into account degrees of hardness of demand constraints which are faced by both state and non-state enterprises.

 The research was prepared with financial assistance from the Moscow Public Science Foundation. 4 The Russian Economic Barometer, Vol VII, N 2, 1998 To sort enterprises into two groups – state and non-state – we are going to use the same simple criterion as in (1) which is based upon self-assessment of their status. This means that directors of enterprises themselves indicated into which of the three categories their enterprises could be classified: state, non- state or intermediate (however, the last is left beyond the present study). This criterion has certain flaw: it does not allow to precisely correlate the groups of enterprises with their ownership structures. Nor does it allow to perfectly differentiate between ownership problems and management problems. Nevertheless, It has certain advantages. The first is that directors make a complex assessment of the status of their enterprises according to the real situation rather than to formal indications. This is especially important, taking into consideration that real factors are often hidden from an outside observer. The second advantage of this criterion is the possibility to use long series that were accumulated in the course of monthly industrial surveys conducted by REB (for details on the correlation between various criteria for classification of an enterprise, see Appendix). 2. Performance Indicators for Two Groups of Enterprises In this article performance of enterprises will be compared by two types of indicators. First are related to the general assessment of financial situation of enterprises: «good - normal - bad». Second deal with financial results of business operation in a six-month period: «profitable –at a break-even point– non-profitable». As shown in Table 1, proportions of financially successful enterprises in the two sectors are approximately the same. Business Performance 5

Table 1. Share of Financially Successful Enterprises in Each Group (*), % (average monthly data for a year) 1994 1995 1996 1997 Average value for the period Non-state 25 28 17 22 23 State 19 30 17 22 22 (*) Financially successful enterprises are those who define their financial situation as "good" or "normal" In terms of profitability (see Table 2), in 1994-1995 non-state enterprises had a slight advantage. In 1996 -1997, however, this advantage disappeared. Table 2. Distribution of Enterprises of Two Groups by the Results of Their Business Operation (average quarterly data for a year, in % of the number of enterprises in each group) 1994 1995 1996 1997 Average for the period Profitable Non-state 60 59 45 34 50 State 45 48 43 32 42 Operating at break-even point Non-state 22 32 24 22 25 State 30 25 25 30 28 Operating at a loss Non-state 17 17 31 43 27 State 25 27 32 38 31 Consequently, a straight-line test demonstrates that performance in the two sectors is approximately the same and gives no proof that one of them has any advantages over the other. 6 The Russian Economic Barometer, Vol VII, N 2, 1998

3. Demand Constraints in the Two Sectors It should be noted that the result we have obtained is not quite correct since it does not take into account that the two groups of enterprises are operating under different business conditions. First of all, their demand situation is different. We can assess demand situation indirectly, using three indicators:  order book level;  stocks of finished products;  the ratio of the first indicator to the second, namely «orders : stocks». In the first two cases, the measurement is taken as percentage to a normal monthly level which is taken by enterprise directors for 100%. The third indicator is a combination of the first two. Table 3 shows that relative order book level of state enterprises constantly exceeds the same indicator for the group of non-state enterprises. Moreover, the gap widened from 1-3 percentage points in the first two years to 9-12 points in 1996-1997. In terms of stocks of finished products, the advantage of state enterprises was even more evident: in the period in question this indicator was 8-19 percentage points lower than in the non-state sector. Consequently, by the third (synthetic) indicator, non-state enterprises had a serious disadvantage to the state sector. Business Performance 7

Table 3. Indicators of Demand for the Two Groups of Enterprises (% of a normal monthly level, average data for a year) 1994 1995 1996 1997 Average for the period Order book level, % (1) Non-state 70 72 61 60 66 State 71 75 73 69 72 Stocks of finished products, % (2) Non-state 97 89 95 90 93 State 88 70 87 78 81 Ratio (3) = (1) : (2) Non-state 0,7 0,8 0,6 0,7 0,7 State 0,8 1,1 0,8 0,9 0,9 Consequently, during the most part of the period in question enterprises of the two groups were operating in different conditions: state enterprises were in a more favorable situation than non-state enterprises. Perhaps this very difference in the working conditions offers an explanation for the fact that straight line tests give no evident results. A natural question arises here: what would the final result be, if the working conditions of state and non-state enterprises were the same? The hypothesis we are going to test below supposes that, given equal conditions, performance of the non-state sector would be better than that of the state sector. 4. Models In order to test the hypothesis formulated above, we shall use simple regression one-factor models where indicators of performance of enterprises in each sector are related to indicators of demand. As before, by indicators of performance (Y ) we shall mean i 1) the share of financially successful enterprises in the group; 2) the share of profitable enterprises in the group, 8 The Russian Economic Barometer, Vol VII, N 2, 1998 and by indicators of demand (x j ) we shall mean 3) order book level 4) stocks of finished products 5) ratio «orders : stocks». In total, we tested 6 one-factor models for each group of enterprises, like

Y = aX + b, where i t jt i = 1, 2 – the index number for the indicator of performance; j = 1, 2, 3 – the index number for the indicator of demand; t = time index. Parameters of each equation were estimated during the whole period considered. For the first indicator of performance time series were monthly (48 points), and for the second indicator they were quarterly (16 points). 5. Results: Correlation between Performance and Demand Before we start to compare state and non-state enterprises, let us find out whether there is any statistically significant correlation between indicators of performance and demand. The fact that assessments of financial situation are closely connected with changes of the order book level was demonstrated by Y. Lukashin (1995). However, his results are refer to an earlier period and to the entire REB industrial sample. General results that refer to the mentioned groups of enterprises are presented in Table 4. Business Performance 9 Table 4. Presence/absence of Correlation Between the Indicators of Performance and Demand Performance State enterprises Non-state enterprises indicators

Demand indicators Share of Share of Share of Share of financially profitable financially profitable successful enterprises (2) successful enterprises (2) enterprises (1) enterprises (1) Orders (1) no no yes (*1) yes (*4) Stocks (2) yes no yes (*2) no Ratio «orders : stocks» (3) yes no yes (*3) no The equations corresponding to this cell marked with (*) will be used for further analysis in Section 6. We give concerned readers the parameters for these equations (standard errors are given in brackets) (*1) a = 0,7 (0,09); b= –22,5 (6,0); R2=0,57 (*2) a = –0,4 (0,08); b= 60,0 (7,5); R2=0,37 (*3) a = 43,5 (3,88); b= 8,7 (2,8); R2=0,74 (*4) a = 1,04 (0,30); b= –18,7 (19,8); R2=0,49 This table shows that one of the differences between the state and non-state sectors is the fact that the former has almost no statistically significant relationship between indicators of performance and demand (there is no such relation in four cases out of six). Meanwhile, for non-state enterprises this relationship does exist (the proportion is inverse: statistically significant correlation can be found in four cases out of six). It is clear that this difference between the two groups of enterprises is quite symptomatic. 6. Results: Comparing Two Groups of Enterprises Now let us experiment with some very simple imitations. Using four models which correspond to cells marked with (*) in Table 4, we shall calculate hypothetical indicators of performance for non-state enterprises in such conditions of demand that were characteristic of state enterprises. Results of our calculations are given in Tables 5 and 6. 10 The Russian Economic Barometer, Vol VII, N 2, 1998 Apparently, when we put demand parameters of the state sector in the model of non-state enterprises, the hypothetical indicators of performance of the latter not only surpass their real values, but also "outstrip" the indicators of state enterprises. For instance, within the four-year period the average share of financially successful enterprises in the non-state sector was 23%, but if we use demand conditions that are characteristic of the state producers this share will grow up to 27%-31%. A similar result can be obtained for all equations and for almost each year. And in almost all cases, the model-calculated share of financially successful non-state enterprises proves to be higher than that of state enterprises. Table 5. Share of Financially Successful Enterprises (in % of the total number in the each group, average annual data) 1994 1995 1996 1997 Average value for the period State enterprises actual 19 30 17 22 22 Non-state enterprises actual 25 28 17 22 23 hypothetical in three variants 1) orders as in the state 26 29 27 24 27 sector 2) stocks of finished products 25 32 25 29 28 as in the state sector 3) ratio ««orders : stocks»» 26 39 26 31 31 as in the state sector Similar calculation of the share of profitable enterprises in the group gives a still more spectacular result (see Table 6.) During the four years, average actual share of profitable enterprises in the non-state sector was 8 percentage points higher than in the state one. But when we level the conditions of demand, this advantage grows up to 14 points. The most impressive result is obtained for 1996-1997 when the actual gap between the two sectors was minimum – under 2 Business Performance 11 percentage points. When the hypothetical indicators of demand were used, the gap rose to 14-21 percentage points in favour of the non-state sector. Table 6. Share of Profitable Producers (in % of the total number in each group, average annual data) 1994 1995 1996 1997 Average value for the period State enterprises actual 45 48 43 32 42 Non-state enterprises actual 60 59 45 34 50 hypothetical orders as in the state 55 59 57 53 56 sector

7. Main Conclusion Consequently, our calculations (which are, indeed, very rough and lacking consideration of many factors) offer some room for optimism: if we could compare the two groups of enterprises after having removed the differences in the conditions of their operation, the superiority in performance of the non-state sector would be quite evident. 8. Appendix (Comparison of Three Classifications) Analyzing the questions discussed in this article, all the enterprises can be classified on the basis of different criteria: 1) upon participation of enterprises in privatization (privatized, non- privatized and not subject to privatization); 2) upon the distribution of their capital; 3) upon personal assessments by their top managers (state, non-state and intermediate). Here are the data calculated for the REB sample that allow to compare the last criterion with the first two. 12 The Russian Economic Barometer, Vol VII, N 2, 1998 Table A1. Structure of the REB Sample (%, average annual data) 1994 1995 1996 1997 Privatized 82 83 86 84 Non-privatized 12 12 8 8 Not subject to privatization 6 5 6 8 Non-state 54 56 60 62 Intermediate 27 26 23 24 State 19 18 16 14

Table A2. Ownership Structure of Enterprises of Different Status (%) State enterprises Intermediate Non-state enterprises enterprises 02-95 02-97 02-95 02-97 02-95 02-97 Directors 3 2 6 11 14 17 Employees 20 18 29 31 51 38 Property funds 17 50 22 19 3 3 Banks 2 0 1 0 2 1 Investment funds 3 0 3 4 4 5 Other enterprises 39 17 17 13 12 15 Holdings 9 0 7 7 2 3 Outside individuals 7 4 14 11 11 16 Foreign shareholders 0 0 1 3 1 2 Other 0 9 0 1 0 0 Total 100 100 100 100 100 100

9. References 1. Sergei Aukutsionek, Rostislav Kapeliushnikov. Ownership Effects in a Transition Economy, The Russian Economic Barometer, 1996, Vol. 5, N 3, p. 19-42 2. Sergei Aukutsionek, Rostislav Kapeliushnikov. Transition Economy and Ownership Effects, The Russian Economic Barometer, 1996, Vol. 5, N 4, p. 21-45 Business Performance 13 3. Sergei Aukutsionek, Rostislav Kapeliushnikov, Vladimir Zhukov. Dominant Shareholders and Performance of Industrial Enterprises, The Russian Economic Barometer, 1998, Vol. 7, N 1, p. 8-41 4. Jurii Lukashin. Determinants of Financial Situation in Russia: Measuring and Econometric Analysis, Econometrics of Transition, Integration and Development, Ilth International Conference of Applied Econometrics Association, Warsaw (Poland). Dec. 5&6, 1995. - University of Lodz, Institute of Econometrics and Statistics, 1995, Proceedings, P. 52-57.

EVALUATION OF STRUCTURAL UNEMPLOYMENT IN RUSSIA (sectoral aspect) A.G.Korovkin, K.V.Parbuzin, (Institute of Economic Forecasting of RAN)

1. Introduction Unemployment arising from a disequilbrium in the supply and demand of labour and from the inefficiency of mechanisms for inter-industry distribution of labour is usually called structural unemployment. It is related basically to the low mobility of labour, to the poor system of vocational training and retraining, and to the underdeveloped system of information in the labour market. Study of this type of unemployment is important for the state employment policy in the today’s Russia, since development of infrastructure in the labour market costs less than creation of new jobs, and has the same decreasing effect on the existing level of unemployment. (For a detailed discussion of structural unemployment and labour market dynamics, see [2].) 2. Evaluation Method To cope with this task we need a quantitative assessment of the level of structural unemployment. Let us use the method described in 14 The Russian Economic Barometer, Vol VII, N 2, 1998 [1]. In this study a concept of «structural balance» is introduced. It is defined as the situation in the labour market when the ratio of the unemployed per one vacant job in all industries is the same. In other words, for every i industry the following equation is true:

Ui / Vi = U / V , (1), where Ui is the number of unemployed in industry i, Vi is the number of vacancies, U and V are, correspondingly, total number of unemployed and total number of vacancies in the whole economy. STRUCTURAL UNEMPLOYMENT (SU) is defined as the number of unemployed who have to migrate from one industry to another in order for the structural balance to be achieved (at a given number of vacancies in each industry). For i industry this number of «potential migrants» is

SUi  Ui  U VVi , consequently, total number of structurally unemployed in the economy is

SU  1 2SUi  1 2 Ui  U VVi . (2) i i Multiplication by 1/2 is performed here in order to avoid double counting, for the sum of positive deviations for some industries is supposed to be equal to the sum of negative deviations in other industries. For practical purposes, the index of structural unemployment can be calculated either as a share in overall unemployment Iu or as a share in total labour force IL. Making the necessary substitutions, we obtain two indices of structural unemployment:

Iu  SU U  1 2 ui  vi i

IL  SU L  U 2L ui vi i Business Performance 15 where ui = Ui /U is the share of i industry in the total number of unemployed, and i = Vi / V is the share of i industry in the total number of vacancies. Before turning to the empirical results of our study, we should like to emphasise an important feature of the above definition of structural unemployment. According to it, the structural component of unemployment is measured in relation to vacancies irrespective of unemployment rates by industry. In other words, it is possible that SU = 0, but unemployment rates in each industry (Ui / Li ) are different. And vice versa: equality of unemployment rates by industry (Ui / Li = U / L) does not imply that structural unemployment does not exist (SU > 0). 3. Empirical Base For calculations we used both Goskomstat data on the number of vacancies by sector and the corresponding information provided by the Federal Service of Employment. Unemployment by sector was calculated on the base of an assumption that for every year its distribution by sector was similar to the structure of separations. 4. Results In 1992-96, total number of structurally unemployed doubled and reached approximately 2.7 million people. This means that by the end of the period in question, structural unemployment accounted for 40% of total number of unemployed and for about 3.6 % of total labour force. Besides, all the above indices show a stable upward trend (see Table 1). 16 The Russian Economic Barometer, Vol VII, N 2, 1998

Table 1. Indices of Structural Unemployment by Sectors 1992 1993 1994 1995 1996 SU (thousand people) 1114.1 1489.6 1874.1 2358.1 2659.3 0.31 0.36 0.34 0.37 0.39 Iu 0.014 0.019 0.025 0.032 0.036 IL In order to reveal sector-specific features in the current changes, we are giving ratios of the unemployed per one vacancy by industry Ui / Vi in relation to the average level of this index (U / V ) (see Table 2). Table 2. Ratios of Indices Ui / Vi by Sectors to the Average U /V Sectors 1992 1993 1994 1995 1996 Average for 1992-96 Construction 2.30 2.37 2.97 4.06 6.37 3.61 Agriculture 1.44 1.92 3.03 2.11 2.82 2.26 Trade, catering, warehousing 2.46 2.16 3.33 2.84 2.57 2.67 Mining and manufacturing 1.59 1.99 1.52 1.92 2.05 1.81 Transport and communication 0.88 0.90 0.90 1.01 1.09 0.96 Forestry 0.52 0.77 0.78 0.79 0.79 0.73 Housing, public utilities and personal services 0.55 0.53 0.52 0.65 0.68 0.59 Education 0.45 0.39 0.49 0.47 0.57 0.47 Science and related services 1.30 0.93 0.52 0.47 0.36 0.72 Finance and insurance 0.18 0.24 0.23 0.32 0.32 0.26 Health care, sports and physical education, social insurance and welfare 0.30 0.30 0.33 0.36 0.31 0.32 Arts and culture 0.45 0.23 0.36 0.37 0.31 0.34 Government 0.20 0.13 0.16 0.17 0.22 0.18 Other industries 0.49 0.41 0.52 0.44 0.46 0.47 Table 2 shows that the major part of structurally unemployed is concentrated in construction, agriculture, trade, catering, warehousing, Business Performance 17 mining and manufacturing. These sectors account for 57% of total employment. Meanwhile, such sectors as government, arts and culture have the lowest number of unemployed per one vacancy. This proves once more that reallocation of labour from primary and secondary to tertiary sectors is one of the main collisions in the current market-oriented reform in the Russian economy. Notice that calculations based on the data by the Federal Service of Employment reveal basically the same trends as the calculations from the data by Goskomstat. Remembering how the information on vacancies is collected, we assume that their number is actually underestimated. From our calculations follows that an increase in the number of vacancies in mining and manufacturing, construction, forestry, agriculture and trade would lower the indicators of structural misbalance in the labour market, while in all the other industries the increase in the number of vacancies would push them up. The real number of vacant jobs in the Russian economy is a problem deserving a special study. 5. Main Conclusions 1. In 1996 the level of structural component reached 39% of total unemployment and had a persistent upward trend. 2. Under the market reforms we can expect further growth of structural unemployment, which may prove to be a serious obstacle to stabilisation of social and economic situation in the RF. 3. Therefore, elimination of this structural component should be one of the most important measures to reduce unemployment in general. 6. References 1. Lilien, D.M. «Sectoral Shifts and Cyclical Unemployment», Journal of Political Economy, Vol. 90, N4, 1982. 2. Korovkin A.G., Parbuzin K.B. Valuation of Unbalance between Supply and Demand on the Russian Labour Market. «Problems of Forecasting», N4, 1997 (in Russian). 18 The Russian Economic Barometer, Vol VII, N 2, 1998 PRIVATISATION AND ENTERPRISE-OWNED SOCIAL ASSETS Prof. N M Healey, Manchester Metropolitan University Prof. V Leksin, Institute for System Analysis Dr. A. Svetov, Institute for System Analysis

1. Introduction Privatisation of state enterprises is a central component of economic transition. In Russia, privatisation has been accompanied by large-scale divestiture of «social assets». Prior to 1991, state enterprises provided significant benefits-in-kind to their employees and their families, owning housing, kindergartens, sports centres, hospitals and out-patient’s polyclinics and, especially in «mono-cities» (i. e., cities in which there was single major employer), operating public transport. Following privatisation, heavy costs of supporting these social services has encouraged many enterprises to divest these assets; indeed, divestiture has often been an explicit condition of privatisation. In most cases, the assets have been transferred to the ownership of local municipalities, with considerable adverse social implications. The municipalities have generally been reluctant or unable to cover the financial cost of taking over these activities. The result is that where social assets have been transferred to the municipalities, the associated services have been degraded and under-maintained and, in some cases, have completely broken down. This paper argues that introduction of new systems of financing for municipal services is important because:

 The paper has been prepared as part of Tacis Project N EDRUS 9410, «Addressing the Social Impact of Economic Restructuring and Privatisation in Russia». Special Thanks are due to the Team Leader, Olivier Allais. Business Performance 19 1. divestiture to municipalities which are unable to finance or manage the social assets of former enterprises is causing great social hardship in Russia; and 2. the demonstrable failure of many municipalities to successfully take over and finance these social assets and continue to provide a satisfactory level of social protection acts as an important obstacle to the broader objectives of economic restructuring. There is a large and extensive literature on privatisation in transition states in general (e.g., Gruszecki and Winiecki, 1991; Baldassarri et al, 1993; Trupiano, 1993; Frydman et al, 1993; Major, 1993; Frydman and Rapaczynski, 1994) and Russia in particular (e.g., Belyanov, 1997; Duflo and Senik-Leygenie, 1997). The issue of how to deal with the social assets owned by enterprises has received much less attention, although Branko (1995) and Commander and Schankerman (1997) are worthy exceptions to this trend. The paper focuses on the issue of how best to municipalise and finance their social services, providing a set of costly policy recommendations for tacking the problem in the short to medium term. 2. State Enterprises and Social Services, Pre-1991 In 1991, social infrastructure managed by state enterprises provided a range of social services to more than half the working population (see Table 1). In addition, «patronage» by enterprises of municipal assets (e.g., schools and recreation centres) and regional and federal assets (e.g., theatres, institutes, etc.) was widespread (Kenway, 1996). Such patronage involved enterprises funding the purchase of equipment and providing maintenance. In sectoral terms, the military-industrial complex, heavy industry (ferrous and non-ferrous metallurgy, oil and gas production, oil refining) and enterprises manufacturing cars, aircraft and instruments were the major providers of social services, reflecting their relative size in the economy and the disproportionate tendency of such enterprises to be located in «mono-cities». Expenditure on social 20 The Russian Economic Barometer, Vol VII, N 2, 1998 benefits per worker in these industries was up to 60% higher than the national average for Russian industry overall. Table 1 Coverage of Enterprise-owned Social Services Housing Kindergartens Children's Recreation Polyclinics and Culture and Camps Hospitals Sports Facilities 32m 5m 1.5m 30m 10m Source: Goskomstat Prior to 1991, the enterprise-owned housing stock amounted to 65% of the municipal stock of Russia, with one of five citizens living in housing owned by his/her enterprise. In addition, at least 1 million people (mainly young workers) lived in dormitories owned by enterprises. This housing stock was generally maintained in the same way as municipal-owned properties, although people on «enterprise housing queues» were generally provided with an apartment faster than those on the «municipal queue» in the same town or region. A unique role in pre-reform Russia was played by the enterprises' healthcare system, whose services were available to an estimated 20-33% of Russian citizens. 70% of large enterprises had health and recreation assets on their books. In the enterprise-owned health sector, the maintenance of assets, the supply of medical equipment, medicines, etc., were almost universally superior to the municipal sector. Enterprise-owned health institutions played a special role in industries with hazardous working conditions or which had a detrimental environmental impact, for example, in over 30 towns and cities across Russia where non- ferrous metallurgical enterprises were deployed, including Bratsk, Krasnoturinsk, Kamensk-Uralsky, Krasnouralsk, Kirovograd, Revda, and Norilsk. In these regions, enterprise-owned health facilities assumed a compensatory function by providing much better medical care than was available from the municipal healthcare system. Such health-care was effectively a social Business Performance 21 benefit provided by environmental polluters to enterprise employees, members of their families and the rest of the population residing in «metallurgical», «chemical» and similar cities and settlements. Childcare facilities were maintained by 75% of large enterprises and over 50% of medium-sized enterprises. Such social assets were on books of both industrial enterprises and state-run and collective farms. The personnel of the enterprise-owned childcare facilities were paid (depending upon industrial affiliation and geographical location) some 20-80% more than their colleagues in the municipal sector. This made it possible for the enterprise-owned childcare facilities to hire the most skilled professionals, including logopedists and music and foreign-language teachers. Enterprise-owned childcare facilities also generally provided better meals to children. They were much better supplied with sports gear, musical instruments, toys, etc. This type of childcare facility was the first in Russia to have swimming pools and, at the beginning of the reform process, the number of enterprise-owned kindergartens with swimming pools was 50 times that in the municipal sector. A distinct indicator of the relative well-being of enterprise- owned childcare facilities was a smaller size of ratio of children to supervisors. Even in the mid-1980s, Moscow, which had a relatively high level of municipal funding, had child/teacher ratios in municipal childcare facilities which were 15-30% higher than in the enterprise-owned sector. All this required higher funding and, in the majority of cases, the actual costs per child were 30-50% higher than in the municipal kindergartens. Sports facilities, and sports activities in general, were much better maintained in the enterprise-owned sector. Many popular sports teams were fully maintained at the expense of enterprises. Enterprises maintained first-class stadiums, as well as the nation's best sports centres for professional training of sportsmen. These stadiums and centres often required resources comparable with the total budget revenue of a small town or settlement. This pattern was equally characteristic of other social assets owned by enterprises and 22 The Russian Economic Barometer, Vol VII, N 2, 1998 organisations (e.g., palaces of culture, recreation centres, children summer camps, etc.). 3. The Problem of Social Assets for Enterprises It may be argued that maintenance of social assets by enterprises is economically justifiable in three cases. These are: 1. if the assets earn a direct profit («direct economic gain»); 2. if the preferential use of these assets, given a tight labour market, makes it possible to closely link the interests of workers and of the enterprise, thereby making it easier to hire and retain staff («indirect economic gain»); or 3. if the maintenance of social assets makes it possible for the enterprise to benefit from some statutory form of charitable status which offers, for example, tax advantages ('indirect economic gain'). Before considering these alternatives, it is important to understand that, even if providing social benefits were financially viable for enterprises, it would still not necessarily be in the wider national interest to do so. This is because many of the services traditionally provided by Russian enterprises have «public good» characteristics. This means that, by definition, enterprises cannot (economically efficiently) recover the full cost of providing the public good, since the optimal price charged to the users should be less than its average cost - in the limit, zero. While the state could subsidise enterprises for the cost of providing these services, this arrangement maintains a financial relationship between the two that privatisation is intended to end in order to allow enterprises to behave commercially. Secondly, individuals who are not employed by enterprises may be denied access to the goods (n. b., this applies in the case of quasi-public goods which are non-rival, but excludable like health care and education), although a peculiar feature of pre-reform Russia was that enterprises often provided benefits to non-employees (see below). Business Performance 23 In any case, however, in the present economic climate, none of the above conditions obtains. The maintenance of all types of social assets is a loss- making activity, with user charges typically covering only 10-60% of the real opportunity costs. With high levels of hidden unemployment, very few firms need 'to keep staff' and, even where there are labour shortages, skilled, mobile workers tend to be younger and more likely to motivated by higher pay and tax- free fringe benefits (e.g., rent-subsidised apartments in private blocks) rather than the availability of relatively low quality social services. Finally, the present legislative arrangements militate against enterprises being able to claim charitable status, ruling out social assets as a significant form of indirectly profitable activity. It is also important to note that the enterprise-owned social infrastructure, virtually across the whole of Russia, has often been mixed «enterprise- owned/municipal», with enterprise-owned social assets (e.g., housing, childcare facilities, et c.) providing services not only to the enterprise employees, but also to those not employed at the enterprise, whose share amounted to 10-50% in 1991. In this sense, enterprises have been implicitly maintaining and funding a portion of social infrastructure which does not provide benefits to their employees. Accordingly, privatised enterprises have no economic incentives for maintaining social assets inherited from the socialist past, the more so because this «heritage» does not, as a rule, meet modern requirements with regard to quality and location. The first act of many privatised enterprises is, therefore, to dispose of the old social assets, along with the entire burden of the associated financial and social problems. The economic consequences of social asset maintenance by enterprises are determined by the totality of: 1. the direct costs of social asset maintenance, as reflected in the enterprise's financial reports; 2. the direct costs not reflected in the reports (e.g., the costs of using productive workers to repair social assets, the use of productive materials for this purpose, the use of factory boiler 24 The Russian Economic Barometer, Vol VII, N 2, 1998 houses and water and sewage facilities for meeting the requirements of social assets, etc.); and 3. The indirect costs of, for example, the partial use of managerial infrastructure for social service delivery to employees. Estimates by surveys carried out by the authors (500 enterprises in 12 regions) suggest that the first and second categories of costs amount to between 10-40% of the total production costs of enterprises which have not divested their social assets. In Russian cities with creeping municipalisation, enterprises are still spending hundreds of millions of dollars on the maintenance of their social assets. The reported (and probably understated) 1996 data suggest that the enterprises of just 12 regions of Russia (namely, Bryansk, Vladimir, Vologda, Kurgan, Lipetsk, Novgorod, Novosibirsk, Omsk, Penza, Tula Provinces, Stavropol Krai and Yamalo-Nenetsk Autonomous District) spent some US$600-700 million maintaining their non-divested social assets. For the whole of Russia, this type of expenditure amounts, on the authors' estimates, to at least US$4.5 billion. Even more remarkably, these expenses cover only one third of the costs required for proper maintenance of social assets, because enterprises have stopped overhauling their social assets, undertaking no modernisation that might reduce the associated annual maintenance costs. By diverting resources to social asset maintenance, enterprises cannot invest in new plant and equipment, leading to deteriorating enterprise performance and further eroding the tax base, shrinking budgetary revenue in a vicious circle. Table 2 shows that as the federal government has scaled back explicit subsidies to enterprises, growing enterprise losses, exacerbated by the need to finance undivested social assets, had driven up tax arrears to 10% of GDP by 1996, putting pressure on the budget deficit. Thus, retaining social assets on enterprise books may be economically harmful both to businesses themselves and to all levels of the state budget in the longer term (Kornai, 1992, 1995). Business Performance 25

Table 2 The Budget Deficit, Enterprise Subsidies and Tax Arrears (% of GDP) General Government Federal Subsidies Stock of Budget Balance to Enterprises Tax Arrears 1992 -21.6 10.4 — 1993 -7.2 3.0 1.7 1994 -10.4 1.8 2.5 1995 -5.5 1.3 3.5 1996 -8.3 — 10.0 Source: EBRD (1997)

4. Social Asset Divestiture by Enterprises, 1993-1997 Between 1993-1997, the divestiture of social enterprise was very rapid (see Table 3). Housing stock, kindergartens, children summer camps, health assets and sports centres were moved wholesale into municipal ownership, together with 70% of sanatoriums and 60% of preventoriums. The pattern was, however, patchy, with the share of social assets retained by enterprises varying considerably from one region to another (from 1-5% for the fastest liberalising regions to 25-30% for the slowest) and, to an even greater extent, from city to city (from 15-20% to 70-85%). Most of the divestitures took place in the period 1993-95, with some 70% of the entire housing stock, 67% of childcare institutions and 70% of children summer camps being transferred to municipalities. During the subsequent two years (1996-1997), a further 10%, 9% and 5% respectively was transferred. Table 3 Percentage of Enterprise-owned Social Assets Divested, 1993-97 Housing Kindergartens Children's Recreation Polyclinics and Culture and Camps Hospitals Sports Facilities 80% 76% 75% 82% 84% Source: Goskomstat 26 The Russian Economic Barometer, Vol VII, N 2, 1998 The slowing down of divestiture was partly arithmetic (high rates of divestiture cannot logically be sustained indefinitely) and partly due to the fact that the «easiest» transfers were made first. By 1995, enterprises were facing the problem of transferring dilapidated housing which required demolition and reconstruction. The number of «discarded» assets (i. e., assets for which enterprises unilaterally renounce responsibility and abandon) doubled in 1996- 1997 as compared to the previous period. Secondly, by 1995, many of the most commercially viable enterprises had been privatised and had disposed of their social assets, leaving a rump of enterprises which either could not or would not restructure. In line with Russian practice, «dilapidated housing» and other excessively depreciated assets cannot, at least in principle, be transferred to the municipalities. They must first be partially or completely restored or demolished and rebuilt. For obvious reasons, many privatised enterprises lack the financial resources to undertake such wholesale renovation. Moreover, many such properties are located in areas which are no longer regarded as appropriate for settlement (e.g., caving zones in mining city and town areas). The share of social assets, divested or being divested, in need of complete restoration or replacement across Russia amounts to an estimated 7-10% of the housing stock, 4-7% of childcare assets and 4-6% of all health assets. In some sub-areas, the picture may be even more bleak. It is possible, for example, that at least 50% of five-storey houses built in the initial period of mass-scale residential construction may be unfit for occupation. Although the proportion of social assets in this condition is relatively small, the costs of their rehabilitation is disproportionately high. In the mining cities of Komi republic, Kemerovo and Tula regions, for example, the estimated cost of demolishing dilapidated housing and constructing new dwellings is 12-20 times higher per square metre than the annual maintenance costs of usable residential housing. For Russia as a whole, the scale of the capital investment required is estimated at Business Performance 27 a minimum of US$14.5 billion; that is, it exceeds the maintenance costs of all social assets divested between 1993 and 1997. The problem is further aggravated by the fact that, as noted above, enterprises have almost completely stopped maintaining housing, heating pipelines, boiler houses (and, more rarely, kindergartens, sports facilities and other assets) which are still on their books. «Discarded» social assets are, as a rule, given top priority and taken over by municipalities, thereby diverting a disproportionately large share of budgetary funding away from maintaining other assets. Municipalities are forced to behave in this manner because they have a statutory responsibility for the social sphere of the city/town, with the residents of «abandoned» houses typically turning for help not to enterprise managers, but to their local administrations. A distinctive feature of social asset municipalisation is its geographical differentiation. While municipalisation is a nation-wide problem, its severity varies dramatically between individual regions and settlements. The share of undivested social assets in different cities varied from 15-85% in 1997. The impact on local budgets of an ever-larger stock of municipal assets is also highly variable across regions and cities. The causes of the territorial differentiation in the acuteness of the budgetary problems are, to a considerable extent, due to different starting conditions shaped by the «patterns of development and deployment of productive forces», the transformation of settlements into «company cities» and the creation of major cities in climatically hostile areas (e.g., Siberia), as well as due to a general practice of priority building of enterprise-owned social assets. As a result, variation in the ratio of enterprise-owned to municipal social infrastructure in regions was counted, in 1991, not in percentages but multiples. For example, the share of the urban population residing in enterprise-owned housing in Bryansk province was, in 1992, twice that in Komi-Permyatsk Autonomous District and four times that in Tyva republic; in Yamalo-Nenetsk autonomous district, the percentage was nine times higher than in Stavropol Krai. Similar magnitudes of 28 The Russian Economic Barometer, Vol VII, N 2, 1998 territorial differentiation were characteristic of health institutions, childcare facilities and other assets. The differences in starting conditions were also due to the different attitude of ministries and agencies to the social sectors of «their» enterprises located in individual settlements. While, for example, the defence enterprises, reporting to the Machine-building Ministry, enjoyed high quality health and childcare facilities and comparatively good housing practically everywhere (frequently concentrated in the so-called «closed» towns), the social sphere of, say, the Solnechny tin-producer located in Khabarovsk Krai (represented, in particular, by unique sports centres) or Severonikel integrated works was far superior to the social assets owned by the otherwise comparable Belov-based zinc producer (Kemerovo province). The social sphere of light industry enterprises, which was poorly funded on the whole, also differed drastically depending upon the location of these enterprises; it tended to be best in the so-called 'textile' cities (where light industry was city-forming) and worst in diversified industrial centres. All of these factors created an extremely heterogeneous environment for institutional transformations in social sphere, turning the problem of social asset municipalisation into a local one, characterised by very different levels of acuteness in each region. 5. The Budgetary Implications of Social Asset Divestment by Enterprises With the onset of recession, the enviable position of enterprise-owned social infrastructure began to deteriorate rapidly. Almost as soon as privatisation took place, when the social assets were still on their books, the maintenance of such assets worsened relative to municipal assets. Public disenchantment quickly led to popular pressure for the municipalities to take over the management of the assets and the associated social services, encouraging enterprises to accelerate divestiture. Local administrations were, understandably, much more cautious, not surprisingly given their increasing financial Business Performance 29 difficulties after 1991. They quickly appreciated that social asset divestiture by enterprises and their subsequent municipalisation, implied, in fiscal terms, shifting the financial burden from businesses to state budgets. The municipalisation of social assets led to an overall increase in all levels of budget expenditure by about US$2.5 billion per annum between 1993 and 1997. Altogether, this resulted in the increase in consolidated budget spending (financing social services) of 16.4% per annum over the same period. This figure disguises an estimated 70% underfunding of housing and other divested asset maintenance, compounded by the fact that almost no resource-saving modernisation has taken place since 1991. In principle, municipalised social assets can be financed in four main ways: 1. local budgets; 2. the federal budget, including special subsidies; 3. enterprises, through, for example, shared funding agreements; and 4. individuals, through user charges. In practice, the financing of social services transferred from enterprises varies considerably (see Table 4). In 1997, for example, Yamalo-Nenetsk Autonomous District had to fund 73% of the cost of its inherited social assets from local budgets, while Vladimir Province benefited from federal transfers equal to 37% of the additional cost, so that only 24% had to be raised from local budgets. 30 The Russian Economic Barometer, Vol VII, N 2, 1998

Table 4 Financing of Divested Social Assets (% share by source), 1997 Yamalo-Nenetsk Vladimir Province Autonomous District Local budgets 73% 24% Federal budget, including special subsidies 8% 37% Enterprises: shared funding agreements 6% 19% Population (user charges) 13% 20% Total 100% 100% Source: Ministry of Economy The share of federal budgets, in terms of federal budget subsidies, in funding the divested social assets averages 14.1% for Russia as a whole. Again, this average disguises large regional variations, with lower values characteristic of the regions which are relatively prosperous in budgetary terms (see Table 5). As a general rule, the share of a region's expenditure on divested social assets from federal sources is directly proportional to its budgetary difficulties. The divestiture of social assets proved to be the heaviest burden for the budgets of federally «subsidised» regions, which were not offset by more generous financial assistance from the federal budget. The same holds for individual settlements, whose needs for external budgetary support brought about by social asset municipalisation differs greatly. This reinforces the conclusion that regional differentiation of the difficulties caused is a greater problem than the municipalisation of social assets per se. Business Performance 31 Table 5 Cost of Financing Divested Social Assets by Selected City/Region (as a percentage of locally - raised tax revenues and of the federal funds allocated to the municipalities) % of Local Tax % of Federal Budget Revenues Financial Assistance Moscow 0.7% 0.6% Yamalo-Nenetsk Autonomous District 3.8% 3.7% Bashkortostan Republic 4.1% 4.0% Lipetsk 5.0% 4.9% Krasnoyarsk krai 5.4% 5.2% Khanty-Mansiisk Autonomous District 5.8% 5.6% St Petersburg 5.8% 5.6% Nizhny Novgorod 7.0% 6.4% Kaliningrad 7.3% 6.7% Kalmykia Republic 128.8% 42.9% Ust-Ordynsk Buryat Autonomous 132.6% 38.1% District Dagestan Republic 137.5% 30.5% (Kostroma Province 179.1% 75.4% Koryak Autonomous District 242.6% 77.3% Ingush Republic 250.0% 53.4% Source: Ministry of Economy Note that following the transfer of social assets, the funding needs are now much higher than the levels reported by enterprises at the time of their divestiture. At present, to keep services at the previous level, local authorities have to spend 15-30% more following municipalisation than enterprises did before divestiture. This is mainly due to the fact that the social costs of enterprises were included (but were not reported) in their production costs, so that actual expenses were 10-25% higher than those reported. Also, actual social expenses of enterprises were cut in recent years, because of worsening financial performance, which contributed to accelerating degradation of social assets after enterprises were privatised. Hence, municipalities have had to pay for the badly-needed repairs of the inherited assets (with 32 The Russian Economic Barometer, Vol VII, N 2, 1998 housing being the main priority), in addition to covering higher-than- anticipated running costs. As far as the municipalities are concerned, the most significant source of funding to cover the extra costs of formerly enterprise-owned social assets is the local tax on enterprises. This tax, together with specific rates and exemptions, is set by the representative local bodies, subject to the constraint that an enterprise's tax liability may not exceed 1.5% of its sales. This tax is widely regarded as a stable, significant and targeted source of funding for municipalised social assets. To reduce the financial burden of enterprises which fully cover, or finance jointly with municipalities, the maintenance costs of social assets, there are tax breaks, allowing the enterprise to write off part or all of its spending against its local tax liability. In determining the size of federal resources allocated to municipalities, the Ministry of Finance uses a procedure, which is common to all industries and regions, for part-financing the costs of maintaining social assets and housing transferred to municipalities. The procedure has changed over time, however. Before 1997, irrespective of the date of formal transfer of social assets, funding had to be continued, up to the end of the fiscal year, by the former owner. Financial assistance from federal budgets to the regions and administrative jurisdictions only started in the fiscal year following the transfer. This assistance was granted from two budget sources: from the federal fund of financial assistance (should social asset transfer take place in the first half of previous year) and from a separate budget called «costs of maintaining social assets and housing transferred to local governments» (should the transfer occur in the second half of the previous year). The total federal budget appropriations in 1996 under these budget headings were US$7.1bn and US$1.2 billion respectively (totalling over 9.5% of all planned federal budget expenditure in 1996). Since 1997, the federal budget no longer contains a special item of costs of maintaining the transferred social assets and the respective subsidies are fully integrated with the transfers made by the federal Business Performance 33 fund of financial assistance to the regions. Accordingly, the Ministry of Finance now includes the extra expenses incurred by regional and local budgets, following municipalisation of social assets, in the base for computation of federal transfers. Federal subsidies for the support of major industries such as, for example, coal mining also include resources for funding enterprise-owned housing and social assets and this comprises a sizeable share of the ‘sectoral support’ package. A special mechanism is used whereby the Ministry of Finance grants, from the resources designed for the support of coal industry, interest-free loans for the funding of social assets transferred by coal mining enterprises to administrations of «coal-mining» towns and settlements. In line with general social policy reform, an ever greater role in funding social assets must be played by the population directly, in more fully covering social service delivery costs. This should, however, be a long-term objective, since significantly greater cost recovery is almost certainly impractical at the present time. The expenses of former enterprise-owned social assets will be higher than normal for some time due to their extended neglect, so that the necessity for urgent, large-scale repairs of divested building, structures and other assets will temporarily inflate the costs borne by individual users. At the same time, household incomes remain very depressed in Russia and there is likely to be considerable resistance by users to the introduction of charges for previously free or subsidised services. It is also worth reinforcing the point that moving to more complete cost recovery may be economically inefficient for social services with significant public good characteristics (e.g., kindergartens, health care, urban public transport), since it is likely to result in consumption being sub-optimally low. 6. Conclusions and Policy Recommendations The problems posed by social asset municipalisation process are having a detrimental impact on enterprises, state budgets and the wider social and political situation in Russia. On the one hand, keeping 34 The Russian Economic Barometer, Vol VII, N 2, 1998 social assets on books of enterprises not only aggravates the physical state of these assets, but drains already scarce financial resources from enterprises, while at the same time eroding the profit tax base and costing the state budget millions of dollars. On the other hand, the transfer to municipalities of «discarded» and degraded social assets generates extra expenses on the part of municipalities and creates an excessive reliance of local and regional budgets on federal subsidies, diverting budget appropriations from maintaining the social sector in general. By 1998, it had become increasingly evident that the municipalisation crisis could not be resolved without concerted public (federal and regional) intervention. Any solution requires a co-ordinated federal, regional and local level approach, not least because a legally-constituted and economically rational outcome requires the co-operation of numerous enterprises, organisations and governmental bodies. The need for a co-ordinated approach in regions and cities must be a necessary prerequisite for providing any financial assistance from the superior budgets (federal and regional). It is clear that the solution must involve pooling and concentration of resources for the targeted funding of social asset transfer and maintenance. This could be achieved by the creation of a range of special budgetary funds at federal, regional and local levels. Contributions to these funds should come from the tax and non-tax income provided for financing social asset transfer and their subsequent funding. All proceeds from state-owned and municipal property privatisation (assigned to the respective level budgets in line with the established standards), dividends from state and municipal-owned shares of joint-stock companies and special taxes on the maintenance of housing and recreational assets (at local level) should all be assigned to these new funds. It may also be possible to direct a fraction of the resources coming from other tax sources (e.g., a fraction of income tax, as was the case in 1996-97) to these funds. Business Performance 35 By the time of transfer, social assets are usually degraded and impose higher maintenance costs than municipal assets. Both, in the former and latter cases, however, there is a common and considerable potential for reducing municipal expenses on housing maintenance, as well as costs with respect to childcare facilities, health institutions, et c., by the resource-saving modernisation of social assets. For example, switching to rational (partially decentralised) heating systems, installing new systems of building insulation (e.g., lagging pipes, double-glazing windows, et c.) and undertaking other energy saving measures could reduce the communal costs of operating such services. Given the chronic shortage of municipality resources, the priorities for funding social asset maintenance should be biased in favour of such modernisation. Resource- saving modernisation might call for a tender selection of projects and a detailed regulation of the resource use procedure, the introduction of tight controls, etc. It is suggested that at least 30% of total budget resources should be directed to the resource-saving modernisation of social assets. In order for relations between enterprises and municipalities, as regards social asset transfer, to be as conflict-free as possible, enterprise managers and local governments should be offered a free choice of several alternative solutions to the social asset funding problem. The selected alternative could be specified and fixed in the form of a bilateral agreement. One alternative is that enterprises could transfer social assets to municipalities and co-fund their maintenance for three years, contributing an agreed percentage of the actual costs previously incurred by the enterprises. These amounts could be remitted to local budgets as special payments for the maintenance of housing and recreation assets. The amount of the payments could be specified in the respective agreement. These resources should not be taken into consideration in computing the budget resource availability, nor affect the size of federal transfers to the region. A fraction of the above resources might, by mutual consent, be handed over to municipalities in kind (products, services, etc.). 36 The Russian Economic Barometer, Vol VII, N 2, 1998 A second alternative might be that enterprises and local authorities could implement an agreed scheme of social asset privatisation, which bypasses their municipalisation. A third possibility is that enterprises and local authorities could enter into agreement on the municipalisation of social assets involving the concurrent transfer of the respective enterprise's stock to the municipality, with the amount specified in the agreement. Finally, enterprises which unilaterally stop funding and discard social assets should be required by the municipality to pay a local tax, possibly at a penal rate, to cover the costs of maintaining such housing and recreational assets pending an agreement about transfer of ownership. References Baldassarri, M, Paganetto, L and Phelps, E S (eds) (1993), Privatization Processes in Eastern Europe: Theoretical Foundations and Empirical Results, Macmillan Belyanov, V (1997), Privatisation of Enterprises and Units in CIS Countries, 1992-96, The Russian Economic Barometer, 3, 27-35 Branko, M (1995), Poverty, Inequality and Social Policy in Transition Economies, Research Project on Income Distribution during the Transition, Paper 9, World Bank Carlin, W and Mayer, C (1992), Restructuring Enterprises in Eastern Europe, Economic Policy, 15, 311-352 Commander, S and Schankerman, M (1997), Enterprise Restructuring and Social Benefits, The Economics of Transition, 5(1), 1-24 de Melo, M, Denizer, C and Gelb, A (1996), Patterns of Transition from Plan to Market, The World Bank Economic Review, 10(3), 397-424 Duflo, E and Senik-Leygenie, C (1997), Industrial Restructuring in Russia: Early Reactions of Firms to the Shock of Liberalisation, The Economics of Transition, 5(1), 24-47 Business Performance 37 EBRD (1996), Transition Report 1996: Infrastructure and Savings, London: European Bank for Reconstruction and Development EBRD (1997), Transition Report 1997: Enterprise Performance and Growth, European Bank for Reconstruction and Development Estrin, S (ed) (1994), Privatization in Central and Eastern Europe, London: Longman Frydman, R and Rapaczynski, A (1994), Privatization in Eastern Europe: Is the State Withering Away?, Oxford University Press Frydman, R, Rapaczynski, A, Earle, J S (1993), The Privatization Process in Central Europe: Economic Environment, Legal and Ownership Structure, Institutions for State Regulation, Overview of Privatization Programs, and Initial Transformation of Enterprises, CEU Privatization Reports, 1, Central European University Press Gruszecki, T and Winiecki, J (1991), Privatization in East Central Europe: A Comparative Perspective, Aussenwirtschaft, 46(1), 67-100 Hughes, G and Senik-Leygonie, C (1992), Industrial Profitability and Trade Among the Former Soviet Republics, Economic Policy, 15, 353-387 Johnson, S and Loveman, G (1995), Starting Over in Eastern Europe: Entrepreneurship and Economic Renewal, Harvard Business School Press Johnson, S, Kaufmann, D and Shleifer, A (1997), Politics and Entrepreneurship in Transition Economies, Working Paper Series, 57, University of Michigan Kapeliushnikov, R (1997), Jobs and Labour Turnover in Russian Industry, The Russian Economic Barometer, 1, 31-51 Kaufmann, D and Kaliberda, A (1996), Integrating the Unofficial Economy into the Dynamics of Post-Socialist Economies: A Framework of Analysis and Evidence, Policy Research Working Paper, 1691, World Bank Kenway, P (1996), The Behaviour of State Firms in Eastern Europe, Pre- privatization: A Generalisation, European Economic Review, 40(2), 491-494 38 The Russian Economic Barometer, Vol VII, N 2, 1998 Kornai, J (1992), The Principles of Privatization in Eastern Europe, De Economist, 140(2), 153-176 Kornai, J (1995), Highways and Byways: Studies on Reform and Post- communist Transition, MIT Press Kumar, A (1993), State Holding Companies and Public Enterprises in Transition, Macmillan Lavigne, M (1995), The Economics of Transition: From Socialist Economy to Market Economy, Macmillan Major, I (1993), Privatization in Eastern Europe: A Critical Approach, Edward Elgar Milanovic, B (1996), Income, Inequality and Poverty during the Transition, Transition Economies Division Research Paper Series, 11, World Bank Roland, G (1993), The Political Economy of Restructuring and Privatization in Eastern Europe, European Economic Review, 37(2-3), 533-540 Tirole, J (1991) Privatization in Eastern Europe: Incentives and the Economics of Transition, in: Blanchard, O and Fischer, S (eds), NBER Macroeconomics Annual 1991, MIT Press, 221-259 Trupiano, G (1993), Privatization in Eastern Europe, Atlantic Economic Journal, 21(1), 27-36 UNDP (1997), Human Development Report, Oxford University Press STUDYING TRANSITION

BARTER AND CLEARING SCHEMES: HOW TO DEFINE BASIC CONCEPTS Andrey Yakovlev, Higher School of Economics In the recent years, the phenomenon of barter transactions in the Russian industry attracted considerable attention from the Russian Economic Barometer. REB is holding the longest time series of empirical data on the issue. Barter turnover was twice the subject of analytical papers published in the bulletin (1, 2). However, our studies allow to suggest that in the last two years, the basic concept of barter has changed. Clearly, this is a matter of great importance for the meaningful interpretation of the REB surveys, as well as of many other surveys. So we should like to examine it more closely. 1. Empirical Data We are going to use the results of a project «The Emergence of the Private Business Sector: Regional Surveys» which was carried out by the Joint Analytical Center (JAC) by a request from the Russian Privatization Center. This project was performed as monitoring of a sample of 250 private and privatized businesses in industry, trade and service sectors of three regions of Russia, namely, Tula and Irkutsk Provinces and Udmurtia Republic. One of the special aims of this project was to make an investigation into methods of settlement and payment at the enterprise level. This investigation was carried out in the autumn of 1997 by processing the data of a questionnaire that had been got from 200 enterprises, and by interviewing in detail a number of enterprise directors on problems and methods of settlement and payment. 40 The Russian Economic Barometer, Vol VII, N 2, 1998 It is worth noting that the JAC questionnaire was formulated in 1995, when the query about relative importance of various ways of payment included only five items, namely,  «payment on account»,  «payment in cash»,  «payment in kind» (barter),  «payment by bills or other commercial instruments»,  «other means of payment». The sum of points attributed to all methods was to be equal to 100%. By 1997, a new and rather obscure way of settlement called clearing schemes came into view and was widely accepted. Generally speaking, it was a way of mutual settlement of liabilities without any transfer of money. However, at that time we had no adequate information on the procedures for such settlements and on their relationship with other ways of payment. For this particular reason, the query on ways of settlement in the basic JAC questionnaire was kept unchanged. Meanwhile, detailed interviews with enterprise directors were designed to meet two specific objectives: first, to get a description of concrete procedures of such clearing schemes, and second, to understand how the respondents understood the relationship between clearing schemes and barter deals. 2. Clearing schemes As indicated by records of the interviews, enterprise directors usually distinguish between two types of clearing schemes, 1) settlement with the state budget or fiscal bodies, and 2) settlement with other enterprises. The second type accounts for about 90% of the total volume of clearing schemes. Let us examine it in details. How do these inter-enterprise clearing schemes look like? Interviews with the respondents show that filling out the questionnaire, they usually described clearing schemes as «barter transactions». Nevertheless, there is an essential difference between clearing schemes and other ways of exchange in kind. Clearing schemes are Studying Transition 41 usually a way of settlement between large-scale enterprises within relatively stable channels of commodity circulation. CASE 1. An enterprise in Tula Province is a producer of construction materials, engaged in extracting mineral gypsum and making dry mixture. A cement plant in Moscow Province is one of its major clients. This plant regularly supplies cement to Cherepovets Electric Power Company. In turn, one of the Cherepovets Company’s customers is Tulaenergo Corporation, a supplier of power to the first enterprise in this chain. The first enterprise in the chain is anxious about settlement with power suppliers, since in case of arrears to the latter, it may be cut off from power supply and have to stop its operation completely. So this enterprise usually initiates the clearing schemes and is actively engaged in lengthy arrangements with all the relevant partners. In the same way, it has managed to reveal in advance all plausible ways to settle liabilities with other key providers (among core suppliers, railways are usually as important as power plants), to agree over all details of the procedure and eventually, to sign an appropriate multilateral agreement. The process of preparation and conclusion of such or similar agreement (which may embrace not just 4 but 6 or 7 partners) usually takes several months, and it may have nothing to do with any current liabilities to the suppliers. Therefore, by contrast to classic barter deals which are direct commodity exchange, clearing schemes are parts of a general system of financial planning, when an enterprise starts to calculate its financial flows and understands the benefits of having settled an arrangement with all major suppliers on mutual clearing in advance. Physical resources that are involved in this settlement are typically not used in any further exchange but directly utilized by the end-user. 3. Barter Transactions in a Narrow Sense This distinction allows to define what is barter turnover in the narrow meaning of this term, as it is understood by enterprise directors. As indicated by the interviews, there are several types of barter transactions. The first type is direct exchange of products or services between two enterprises. 42 The Russian Economic Barometer, Vol VII, N 2, 1998 CASE 2. Our respondent, the above-mentioned enterprise in Tula Province, is ready to supply its product (dry mixture for construction works) to a client who is willing to supply pipes in exchange; the latter are needed by our respondent for the repair of water and heat facilities on its premises. This exchange in kind was initiated by the purchaser, and it depended on whether the supplier actually needed at the moment the products which the purchaser could offer for exchange. The second type is recovery of old unsettled debts owed by purchasers who had received deliveries without prepayment, while at present, the supplier is eager to get any payment at all. This is typical of some enterprises which, because of their special sectoral characteristics or very unfavorable location, have troubles with choice of clients. CASE 3. Our respondent, a privatized industrial enterprise in Udmurtia, engaged in land reclamation, was willing to utilize its idle capacities and from time to time was forced to comply with extremely unfavorable terms of orders, such as very long delays of settlement and high probability of compulsory barter transactions. For example, one of recent orders was settled with delivery of «Moskvich» passenger cars made by a local manufacturer and sold with a 30-% markup. If our respondent refused, it could get nothing at all. The «Moskvich» cars were used later for further exchange. The third type of barter deals was mentioned in an interview with a wholesale trader in Udmurtia. This is a situation when a customer (another trader or a manufacturer) offers the choice of settlement either in cash or in kind. Contrary to the presumption which is widely shared in the Russian government, this was the only case when this exchange in kind (and for cost rather than price) could be actually motivated by tax evasion. In situation like this, the most popular, tradable goods were used for exchange, such as chocolate, beverages, chewing gum, computers and office supplies. In one of the interviews, forage was also mentioned as a means of exchange. In this variety of types, there is one common feature. Aside from being direct, all deals were spot and occasional. It never mattered Studying Transition 43 whether goods received in exchange were used directly (as in the first case) or entered further exchanges (as in the second and third cases). 4.The Relationship Between Barter Transactions and Clearing Schemes Clearly, when this distinction is made, clearing schemes must appear to be much more common than barter exchange (in narrow sense). Using the data from the JAC project, we could not make a correct test of this supposition. Nevertheless, it is well confirmed with the data from a questionnaire that had been sent out by the Center of Economic Analysis and Forecasting under the Government of the Russian Federation in the second quarter of 1997 to the directors of 800 industrial enterprises. Instead of a single question concerning the share of barter in total turnover, this survey, for the first time, included two questions, first, about the share of pure barter (exchange in kind), and second, about the share of barter related to clearing schemes. The survey displayed that in mid-1997, about 4/5 of total barter transactions among industrial enterprises were related to clearing schemes. Summing up, we can state with assurance that both barter deals (in any sense) and clearing schemes are typically alternative non-monetary forms of settlement. Nevertheless, the two concepts rather cross than cover each other. In order to find out their actual relationship, we should like to offer two interpretations of this term, in a broad sense and in a narrow sense. In the broad sense, we should mean total combination of non-monetary forms of settlement which avoid usage of financial vehicles. In the narrow sense, we should mean exclusively the inter-enterprise deals involving direct exchange in kind (regardless of the ways of further utilization of bartered goods, either in-house consumption or further exchange). We suppose that in 1993-1994, the difference between the two types of barter was negligible, for actually all such deals amounted to direct exchange in kind. On the contrary, in 1996-1997 this difference became important, because inter-enterprise clearing schemes proliferated. 44 The Russian Economic Barometer, Vol VII, N 2, 1998

Figure 1 Changing Composition of Alternative Non-monetary Forms of Settlement (General Scheme)

1 9 9 3 -1 9 9 4 1 9 9 6 -1 9 9 7 Version A Version B

Bills and other Bills and other financial vehicles financial vehicles

Bills and other financial vehicles Clearing schemes with bills etc.

Clearing schemes Barter with clearing schemes Barter (in the broad sense)

Pure barter Barter (in the (exchange in narrow sense) kind)

«Clearing schemes» have partly replaced barter deals and payments with bills or other financial vehicles (See Fig. 1, Version A). However, to make the composition of payments by type in 1993-1994 and 1996-1997 comparable, we may use our idea to divide clearing schemes into «schemes with bills etc.» and «barter with clearing schemes» (see Fig. 1, Version B). On the basis of present knowledge we may suggest that the data of REB (Series N18) display the share of barter in the broad sense and show that this share has been growing for the last two years. As for barter in the narrow sense, according to the results of JAC project and to the data by the Center of Economic Analysis and Forecasting, its share has been stable or even declining recently. Studying Transition 45

5. References: 1. S. Aukutsionek. Barter in Russian Industry. REB, 1994, vol. III, N3. 2. S. Aukutsionek. Industrial Barter in Russia. REB, 1997, vol. VI, N3.

ON TYPES OF BARTER Sergei Aukutsionek

Rapid proliferation of barter is one of the most spectacular developments in the Russian economy in recent years. It seems incredible that modern industry could have adapted itself to such ancient ways of trade. No wonder that many researchers trying to explain this unnatural combination often express their doubt: is the observed phenomenon really barter? Interpretation of empirical data, one of the REB series in particular (see Series N18 «Share of barter in sales») depends on the answer to this question. Therefore, it is timely to make a brief inquiry into the area of definitions. To develop the subject of the previous article, I should like to offer several comments. 1. Modern Barter and «Genuine» Barter An argument about what is «genuine» barter could inevitably drive us into looking for analogs in history and could get us far away from our subject. No matter which definition we may choose, almost certainly it will never incorporate all transactions that belong to the barter, according to the belief of our respondents. There is only one feature we can be quite sure about: the modern barter includes transaction of DIFFERENT LEVELS OF COMPLEXITY. Indeed, some cannot be realized anywhere but in modern economy, and are incompatible with the economy of the Stone Age. However, other are very simple and can be realized between tribes as well as between enterprises. I am not sure that considering only the second kind of deals (the simplest) as the genuine barter we can find the best solution to the problem of terminology. Applying the same logic to ordinary sales (for money) we should believe that genuine sales are only this that are 46 The Russian Economic Barometer, Vol VII, N 2, 1998 made, for example, for golden coins. And all other kinds of sales (sales for paper money, sales for credit cards etc.) are not genuine sales. I think that the classification offered by A. Yakovlev, e. g. to differentiate between barter dealings in the narrow and the broad sense, is preferable if maybe insufficient. The number of types of barter that deserve classification is probably more than two. And if the barter economy has a long time ahead, we may well have to bring into scientific usage a range of concepts of barter, varying in complexity and one fitting into another: B0, B1, B2 (like monetary aggregates M0, M1, M2). 2. Types of Elaborate Barter Transactions However, the main point is the choice of criteria to classify various types of barter. Certainly, a multilateral deal between 4 to 7 enterprises, coordinated in advance, differs a great deal from a primitive spot exchange in kind between two incidental partners. Clearly, it is better to have different terms for their description. But what about transitional forms? Not always the evidence (or absence) of signs of a clearing scheme can be properly used. First, the notion of clearing schemes is still rather vague, and second, these schemes are also not uniform. I suppose that it is easier to begin with defining simple types of barter and then to sort out the more complicated ones from the remainder. Let us take an example of several simplest criteria which can be established with the REB estimates (figures in brackets stand for shares of the relevant kind of barter deals in total barter in the early 1998, in %): 1. Barter deals without flow of funds between payment accounts (62%), and with flow of funds (38%). 2. Barter deals with new trade partners (those who appeared since 1992) (64%), and with old partners (36%). 3. Bilateral transactions (65%), and coordinated schemes including 3 or more enterprises (35%). Studying Transition 47 In each pair of types of barter transactions, the first is simple and the second is more elaborate. They are more sophisticated in the sense that imply a developed economy. 3. Barter and Clearing Schemes Notice how close are the values of all three criteria. For the most elaborate schemes, they are 38 - 36 - 35%%. It is highly possible that in each of the three cases the same core of enterprises (or deals, to be exact) is involved. Indeed, the relationship is very transparent. The longer the partners trade with each other, the easier they can enter into multistage barter schemes, particularly into the mixed schemes (partially with financial coverage). Probably it is this part of barter transactions, about 35% of their total volume, which is described with the term «clearing schemes». Is this data inconsistent with the estimation by A. Yakovlev (80%)? It probably isn’t. Perhaps the rest of «clearing schemes» in the total volume of barter (about 45%) belongs to the more simple deals. For example: there may be a deal within long-established channels, planned well in advance, but involving just two partners. Or there may be a scheme involving 4 to 7 partners, but their relations are comparatively new (established since 1992), etc. 4. General Conclusion The modern barter in the Russian economy is far from being simple. It includes many types of transactions. No less than 1/3 of them (according to another estimation, up to 80%) are possible only in a modern economy. As time passes, their share tends to increase. OFFICIAL DOCUMENTS: SUMMARY AND COMMENTS

LIST OF OFFICIAL DOCUMENTS ON PRIVATISATION AND CHANGE OF OWNERSHIP FORMS IN RUSSIAN FEDERATION (Prepared by Vladislav Belyanov) (Complements to the list published in «REB» Vol.I, 1992, No.4; Vol.II, 1993, No.2, 4; Vol.III, 1994, No.1, 2, 3, 4; Vol.IV, 1995, No.1, 2, 3, 4; Vol.V, 1996, No.1, 2, 3, 4; Vol.VI, 1997, No.1, 2, 3, 4; VOL.VII, 1998, NO.1) This part of the list embraces instruments dating to December 1997-April 1998. During this time measures aimed at strengthening state regulation of the economy obviously dominated. Here relate federal laws «On Insolvency (Bankruptcy)», «On State Regulation of Development of Aviation», «On Limited Liability Companies», «On 1998 Federal Budget», RF President’s decree of 10 January 1998, No.14 «On Russian Federation State Committee for Securing Monopoly for Liquors», a number of RF government’s decrees and departmental documents. Simultaneously the privatisation policies continued which was testified by the decisions on sale of the federal stake of «Rosneft» Joint Stock Company’s shares, on closure of «Rossiiskaya metallurgia» Joint Stock Company etc. Official Documents: Summary & Comments 49

1 Laws of the Russian Federation. Decrees by the Chambers of the Federal Assembly of the Russian Federation – the Council of Federation and the State Duma

On Declining Representations of Shefer Viktor Eduardovich as Not Conformable to Requirements of Federal Constitutional Law «On Constitutional Court of Russian Federation». Decision by RF Constitutional Court of 1 October 1997 No.116-O. (On privatisation of housing in closed military townships). Sobranie zakonodatelstva Rossiiskoi Federatsii, 1998, No.4, A.530. On Insolvency (Bankruptcy). Federal Law No.6-FZ. Adopted by State Duma 10 December 1997. Approved by Council of Federation 24 December 1997. Signed by RF President 8 January 1998. Ibid., 1998, No.2, A.222. On State Regulation of Development of Aviation. Federal Law No.10-FZ. Adopted by State Duma 10 December 1997. Approved by Council of Federation 24 December 1997. Signed by RF President 8 January 1998. Ibid., 1998, No.2, A.226. On Extending Term of Activity of Russian Federation Federal Assembly State Duma Commission for Analysis and Examination of Conformity of Procedure, Terms, Results and Consequences of Tenders for Sale of «Svyazinvest», «Tyumenskaya neftyanaya kompaniia» and «Sibneft» Open Joint Stock Companies’ and «Norilskii nikel» Russian Joint Stock Company’s Shares to Russian Federation Legislation. Decree by State Duma of RF Federal Assembly of 21 January 1998, No.2133-IIGD. (The term is extended till 1 March 1998). Ibid., 1998, No.5, A.546. On Conclusions from Analysis and Examination of Conformity of Procedure, Terms, Results and Consequences of Tenders for Sale of «Svyazinvest», «Tyumenskaya neftyanaya kompaniia» and «Sibneft» Open Joint Stock Companies’ and «Norilskii nikel» Russian Joint Stock Company’s Shares to Russian Federation Legislation. Decree by State Duma of RF Federal Assembly of 11 March 1998, No.2267-IIGD. Ibid., 1998, No.12, A.1407. On Commission to Russian Federation Audit Chamber. Decree by Council of Federation of RF Federal Assembly of 28 January 1998 No.34-SF. (On auditing the 1996-97 budget of Republic of Khakassia including issue and placement of liabilities along with issue of guarantees by government of Republic of Khakassia.) Ibid., 1998, No.6, A.716. On Limited Liability Companies. Federal Law No.14-FZ. Adopted by State Duma 14 January 1998. Approved by Council of Federation 28 January 1998. Signed by RF President 8 February 1998. Ibid., 1998, No.7, A.785. On Russian Federation’s Joining Convention UNIDRUA on International Financial Leasing. Federal Law No.16-FZ. Adopted by State Duma 16 January 1998. Approved by Council of Federation 28 January 1998. Signed by RF President 8 February 1998. Ibid., 1998, No.7, A.787. 50 The Russian Economic Barometer, Vol VII, N 2, 1998

On Commission to Russian Federation Audit Chamber. Decree by State Duma of RF Federal Assembly of 13 February 1998, No.2194-IIGD. (On overall audit of financial and economic activities of defence enterprises located on Tomsk Oblast territory, «Vostochnaya neftyanaia kompania» and «Tomskii neftekhimicheskii kombinat» JSCs, enterprises of Tomsk Oblast agro-industrial complex). Ibid., 1998, No.8, A.932. On Measures for Strengthening State Industrial Policies and Creating Conditions for Economic Growth of Russian Federation. Decree by Council of Federation of RF Federal Assembly of 18 February 1998 No.54-SF. Ibid., 1998, No.9, A.1067. On Restructuring in Russian Federation’s Electric Power Industry. Decree by State Duma of RF Federal Assembly of 18 February 1998, No.2203-IIGD. Ibid., 1998, No.9, A.1083. On Introducing Amendments and Additions to Federal Law «On Central Bank of Russian Federation (Bank of Russia)» and Federal Law «On Introducing Amendments and Additions to RSFSR Law «On Central Bank of RSFSR (Bank of Russia)». Federal Law No.34-FZ. Adopted by State Duma 23 January 1998. Approved by Council of Federation 18 February 1998. Signed by RF President 4 March 1998. Ibid., 1998, No.10, A.1147. On Representation of Council of Federation of Russian Federation Federal Assembly in Board of Directors of «EES Rossii» Russian Joint Stock Company. Decree by Council of Federation of RF Federal Assembly of 13 March 1998 No.103-SF. Ibid., 1998, No.12, A.1392. On Results of Audit of Activities of «EES Rossii» Russian Joint Stock Company’s Top Management by Russian Federation Audit Chamber. Decree by State Duma of RF Federal Assembly of 18 March 1998, No.2295-IIGD. Ibid., 1998, No.13, A.1487. On Introducing Additions to Article 2 of Russian Federation Law «On Tax on Securities Transactions». Federal Law No.36-FZ. Adopted by State Duma 21 January 1998. Approved by Council of Federation 12 March 1998. Signed by RF President 23 March 1998. Ibid., 1998, No.12, A.1349. On Precious Metals and Stones. Federal Law No.41-FZ. Adopted by State Duma 4 March 1998. Approved by Council of Federation 12 March 1998. Signed by RF President 26 March 1998. Ibid., 1998, No.13, A.1463. On 1998 Federal Budget. Federal Law No.42-FZ. Adopted by State Duma 4 March 1998. Approved by Council of Federation 12 March 1998. Signed by RF President 26 March 1998. (For issues of privatisation and change of ownership forms see Articles 12, 20, 22, 28, 29, 30, 50, 51, 52, 72, 73, 92, 94, 95, 100, 101, 103, 105, 106, 115). Ibid., 1998, No.13, A.1464. On Address of State Duma of Russian Federation Federal Assembly «To Russian Federation President, Council of Federation of Russian Federation Federal Assembly, Russian Federation Government on Taking Urgent Anti-crisis Measures and Securing Russia’s Social and Economic Development». Official Documents: Summary & Comments 51

Decree by State Duma of RF Federal Assembly of 20 March 1998, No.2317-IIGD. Address of State Duma of Russian Federation Federal Assembly «To Russian Federation President, Council of Federation of Russian Federation Federal Assembly, Russian Federation Government on Taking Urgent Anti-crisis Measures and Securing Russia’s Social and Economic Development». Ibid., 1998, No.14, A.1530. On Overcoming Crisis in Russian Federation’s Economy and on Strategy of State Economic Security. Decree by State Duma of RF Federal Assembly of 20 March 1998, No.2318-IIGD. Ibid., 1998, No.14, A.1531. On Crisis of Russia’s Coal Industry and Measures to Overcome It. Decree by State Duma of RF Federal Assembly of 20 March 1998, No.2321-IIGD. Ibid., 1998, No.14, A.1534. On Information from Russian Federation Government on Situation in Russia’s Coal Industry. Decree by Council of Federation of RF Federal Assembly of 1 April 1998 No.134-SF. Ibid., 1998, No.14, A.1517. On Management of Russian Federation’s Timber Industry. Decree by Council of Federation of RF Federal Assembly of 1 April 1998 No.137-SF. Ibid., 1998, No.15, A.1725. On Enhancing Role of Russian Federation Subjects in Management of Russia’s Power Complex. Decree by Council of Federation of RF Federal Assembly of 1 April 1998 No.138- SF. Ibid., 1998, No.15, A.1726. On Case of Examining Conformity of Items 1, 3 and 4 of Article 32 and Items 2 and 3 of Article 49 of Federal Law of 15 June 1996 «On Partnerships of Housing Owners» to Constitution in Connection with Inquiry from Soviet District Court of Omsk. Decree by RF Constitutional Court of 3 April 1998. Ibid., 1998, No.15, A.1794. On Illegal Decisions of Acting Prime Minister of Russian Federation Government S.V.Kirienko on Transferring Real Estate Units of Russia Military Bases Located on Territory of Georgia to Georgia. Decree by State Duma of RF Federal Assembly of 8 April 1998, No.2364-IIGD. Ibid., 1998, No.15, A.1754. 2 Decrees and Orders by the President of the Russian Federation

On Introducing Amendments and Additions to Decree by Russian Federation President of 25 August 1997, No.919. Decree by RF President of 4 January 1998, No.2. (On setting up «Teleradiokompania «Peterburg» Open Joint Stock Company). Ibid., 1998, No.1, A.100. On Russian Federation State Committee for Securing Alcohol Monopoly. Decree by RF President of 10 January 1998, No.14. (On setting up the committee). Ibid., 1998, No.3, A.309. 52 The Russian Economic Barometer, Vol VII, N 2, 1998

On Retaining «Moskovskii zavod «Sapfir» Open Joint Stock Company’s Shares in Federal Ownership. Decree by RF President of 15 January 1998, No.27. (Retaining 25,5% of shares). Ibid., 1998, No.3, A.312. On Decrees by Cabinet of Ministers of Republic of Adygeia of 9 June 1997, No.179, 180, 181, 182 and of 23 June 1997, No.207, 208, 209, 210. Decree by RF President of 26 January 1998, No.74. (Suspending operation of these decrees approving recommendations to collective units on shares, closed joint stock companies, kolkhozes and farmer associations as violating federal legislation). Ibid., 1998, No.5, A.562. On Presidential Programme «Government Housing Certificates». Decree by RF President of 28 January 1998, No.102. Ibid., 1998, No.5, A.567. On Transferring «Kalmykneft» Joint Stock Company’s Shares Being in Federal Ownership to Republic of Kalmykia. Decree by RF President of 29 January 1998, No.108. Ibid., 1998, No.5, A.569. On Additional Measures for Attracting Investment in Development of Domestic Car Industry. Decree by RF President of 5 February 1998, No.135. Ibid., 1998, No.6, A.721. On Further Extension of Investment Funds’ Activities. Decree by RF President of 23 February 1998, No.193. Ibid., 1998, No.9, A.1097. On Working Group for Drawing up Agreed Proposals on Development of Land Reform in Russia. Order by RF President of 23 February 1998, No.56-rp. On Make up of Working Group for Drawing up Agreed Proposals on Development of Land Reform in Russia. (Head of group – S.M.Shakhrai, plenipotentiary of RF President in RF Constitutional Court). Ibid., 1998, No.9, A.1106. On Introducing Amendments to Decree by Russian Federation President of 4 July 1997 No.679 «On Sale of «Kirovo-chepetskii khimicheskii kombinat» Joint Stock Company’s Shares Retained in Federal Ownership». Decree by RF President of 2 March 1998, No.217. (As amending Decree of 4 July 1997 No.679 -- Ibid., 1997, No.27, A.3189 – it is decided to sell 19% (not 38%) of JSC’s shares retained in federal ownership; prior to this they are to be transferred to Kirov Oblast on account of resources from privatisation and federal budget expenditures). Ibid., 1998, No.10, A.1154. On Preparatory Measures for Sale of «Neftianaia kompania Rosneft» Open Joint Stock Company’s Shares. Decree by RF President of 3 March 1998, No.221. Ibid., 1998, No.10, A.1156. On Additional Measures for Securing Management of Russia’s Electric Power Complex. Decree by RF President of 3 March 1998, No.222. Ibid., 1998, No.10, A.1157. On Issuing External Bonds of Government of Republic of Tatarstan. Decree by RF President of 20 March 1998, No.280. Ibid., 1998, No.12, A.1425. On Introducing Amendments to Decree by Russian Federation President of 23 July 1997, No.775 «On Changing Procedure for Sale of Released Army Official Documents: Summary & Comments 53

Property and for Corporatisation and Privatisation of Army Trade Enterprises». Decree by RF President of 28 March 1998, No.297. Appendix. Normatives for Distributing Money Resources from Sale and Use (for Exception of Lease) of Released Army Property. Ibid., 1998, No.13, A.1506. On Approving Statute on Procedure for Submitting Materials, Necessary for Preparation for Considering Issues of Granting to Russian Federation Organisations Right for Foreign Trade in Military Products, to Coordination Interdepartment Council for Military and Technical Cooperation of Russian Federation with Foreign Countries. Decree by RF President of 30 March 1998, No.327. Statute on Procedure for Submitting Materials, Necessary for Preparation for Considering Issues of Granting to Russian Federation Organisations Right for Foreign Trade in Military Products, to Coordination Interdepartment Council for Military and Technical Cooperation of Russian Federation with Foreign Countries. Ibid., 1998, No.14, A.1543. Order by RF President of 30 March 1998, No.100-rp. (On conducting inventory of units of sea, river and air transport privatisation of which is forbidden). Ibid., 1998, No.14, A.1571. 3 Decrees and Orders by the Government of the Russian Federation

Issues of Russian Federation Ministry of State Property. Decree by RF Government of 29 December 1997, No.1644. Ibid., 1998, No.1, A.144. On Procedure for Stopping or Limiting Supply of Electric and Heat Power and Gas to Consumer Organisations in Case of Non-payments for Already Supplied (Used) Resources. Decree by RF Government of 5 January 1998, No.1. Procedure for Stopping or Limiting Supply of Electric and Heat Power and Gas to Consumer Organisations in Case of Non-payments for Already Supplied (Used) Resources. Ibid., 1998, No.2, A.262. On Approving Procedure for Arranging Tender (Auction, Contest) for Sale of Land Plots Situated in Urban or Rural Municipalities or Right for Their Lease to Individuals and Legal Entities. Decree by RF Government of 5 January 1998, No.2. Procedure for Arranging Tender (Auction, Contest) for Sale of Land Plots Situated in Urban or Rural Municipalities or Right for Their Lease to Individuals and Legal Entities. Ibid., 1998, No.2, A.263. On Procedure for Assigning and Using Administrative Premises Being in Federal Ownership. Decree by RF Government of 5 January 1998, No.3. Ibid., 1998, No.2, A.264. 54 The Russian Economic Barometer, Vol VII, N 2, 1998

On Federal Debt Centre under Russian Federation Government. Decree by RF Government of 6 January 1998, No.6. Statute on Federal Debt Centre under Russian Federation Government. Ibid., 1998, No.2, A.267. On Establishing Specialised State Tax Inspectorate for Work with Major Tax Payers. Decree by RF Government of 6 January 1998, No.9. Ibid., 1998, No.2, A.268. On Measures for Securing Transparency of Settlements Between Federal Budget and «EES Rossii» and «Gazprom» Russian Joint Stock Companies, «Aereflot – rossiiskie mezhdunarodnye avialininn» Joint Stock Company and Organisations of Federal Rail Transport. Decree by RF Government of 6 January 1998, No.10. Ibid., 1998, No.2, A.269. On College of State Representatives in «EES Rossii» Russian Joint Stock Company. Decree by RF Government of 6 January 1998, No.39. Make up of College of State Representatives in «EES Rossii» Russian Joint Stock Company. Ibid., 1998, No.3, A.348. On Closing «Rossiiskaia metallurgia» Open Joint Stock Company. Decree by RF Government of 8 January 1998, No.14. Ibid., 1998, No.3, A.362. On Measures for Stimulating Reform of Housing and Public Utilities. Decree by RF Government of 9 January 1998, No.31. Ibid., 1998, No.3, A.352. On Submitting Draft Decree «On Transferring «Kalmneft» Joint Stock Company’s Shares Being in Federal Ownership to Republic of Kalmykia» to Russian Federation President for Approval Thereof. Decree by RF Government of 9 January 1998, No.33. Ibid., 1998, No.3, A.369. On Federal Target Programme «Government Housing Certificates». Decree by RF Government of 20 January 1998, No.71. Federal Target Programme «Government Housing Certificates». Ibid., 1998, No.5, A.615. On Approving Statute on Exerting State Control over Use, Protection and Reproduction of Timber on Territory of Secret Military and Defence Units. Decree by RF Government of 24 January 1998, No.77. Statute on Exerting State Control over Use, Protection and Reproduction of Timber on Territory of Secret Military and Defence Units. Ibid., 1998, No.5, A.617. On Measures for Development of One-Science-and Production-Complex Municipalities (Naukograds). Decree by RF Government of 24 January 1998, No.79. Provisional Procedure for Attributing Municipality to Naukograd. Provisional Statute on State Support of Naukograds. Ibid., 1998, No.5, A.618. On Sale of «Aviakompania «Sibir» Open Joint Stock Company’s Shares Being in Federal Ownership. Decree by RF Government of 24 January 1998, No.86. Official Documents: Summary & Comments 55

(On sale of 25,5% of shares which have been in federal ownership and introduction of «Golden share» regime till a special decision is taken). Ibid., 1998, No.5, A.623. Order by RF Government of 26 January 1998, No.96-r.(Specifying that decisions on releasing and selling property of army trade enterprises are taken by RF Ministry of State Property on initiative of RF Ministry of Defence). Ibid., 1998, No.5, A.660. On Commissioning Russian Federation Ministry of Economy with Functions of Federal State Body with Authority of State Regulation of Setting up, Running and Liquidating Financial- industrial Groups. Decree by RF Government of 2 February 1998, No.104. Ibid., 1998, No.6, A.738. On Transferring of Seized or Ownerless Radio Electronic and Special Technical Devices Withdrawn from Circulation or Having Limited Circulation on Territory of Russian Federation to Federal Executive Bodies Invested with Authority for Their Use. Decree by RF Government of 2 February 1998, No.111. Ibid., 1998, No.6, A.744. On Some Measures Aimed at Improving Systems That Secure Quality of Products and Services. Decree by RF Government of 2 February 1998, No.113. Ibid., 1998, No.6, A.745. On Approving Statute on State Control over Prospecting, Rational Use and Protection of Mineral Resources. Decree by RF Government of 2 February 1998, No.132. Statute on State Control over Prospecting, Rational Use and Protection of Mineral Resources. Ibid., 1998, No.6, A.756. On Assigning Timber on Defence Territory to Federal Executive Body for Defence. Decree by RF Government of 2 February 1998, No.135. Procedure for Assigning Timber on Defence Territory to Federal Executive Body for Defence. Ibid., 1998, No.6, A.758. On Procedure for Financing Investment Programmes of Conversion of Defence Industry from Federal Budget and Terms of Their Selection Through Tender. Decree by RF Government of 2 February 1998, No.143. Statute on Procedure for Financing Investment Programmes of Conversion of Defence Industry from Federal Budget and Terms of Their Selection Through Tender. Ibid., 1998, No.6, A.762. On Retaining «Moskovskii zavod «Sapfir» Open Joint Stock Company’ Shares in Federal Ownership. Decree by RF Government of 2 February 1998, No.145. (Retaining 25,5% of shares). Ibid., 1998, No.6, A.764. On Urgent Measures for Raising Efficiency of Russia’s Air Companies. Decree by RF Government of 2 February 1998, No.146. Ibid., 1998, No.6, A.765. On Setting up «Morskoi torgovyi port Olia» State Unitary Enterprise. Decree by RF Government of 2 February 1998, No.102. (Olya village of Liman Rayon, Astrakhan Oblast). Ibid., 1998, No.6, A.771. 56 The Russian Economic Barometer, Vol VII, N 2, 1998

On Centre for Research into Business Conditions under Russian Federation Government. Decree by RF Government of 3 February 1998, No.152. Statute on Centre for Research into Business Conditions under Russian Federation Government. Ibid., 1998, No.6, A.768. On Approving Rules of Gas Supply in Russian Federation. Decree by RF Government of 5 February 1998, No.162. Rules of Gas Supply in Russian Federation. Ibid., 1998, No.6, A.770. On Commissioning Russian Federation Ministry of Fuel and Power with Functions of State Supervision over Effective Use of Power Resources in Russian Federation. Decree by RF Government of 12 February 1998, No.166. Ibid., 1998, No.7, A.849. On Concluding Agreement on Setting up «Interagroinvest» Financial-industrial Group Between Russian Federation Government and Government of Republic of Belarus. Decree by RF Government of 15 February 1998, No.199. Ibid., 1998, No.8, A.982. On State Body for Cases of Bankruptcy and Financial Rehabilitation. Decree by RF Government of 17 February 1998, No.202. Ibid., 1998, No.8, A.955. On Peculiarities of Securities Circulation Conditioned by Change of Nominal Cost of Russian Bank-notes and Price Scale. Decree by RF Government of 18 February 1998, No.217. Ibid., 1998, No.8, A.962. On Approving Rules for Conduct of General State Register of Rights for Real Estate and Transactions in It. Decree by RF Government of 18 February 1998, No.219. Rules for Conduct of General State Register of Rights for Real Estate and Transactions in It. Ibid., 1998, No.8, A.963; No.9, A.2128. On Approving Statute on Providing Forestry Plots in Free-of-charge Use. Decree by RF Government of 18 February 1998, No.224. Statute on Providing Forestry Plots in Free-of-charge Use. Ibid., 1998, No.8, A.964. On Approving and Submitting for Ratification Agreement on Permanent Representative Office of International Finance Corporation in Russian Federation Between Russian Federation Government and International Finance Corporation. Decree by RF Government of 18 February 1998, No.208. Ibid., 1998, No.8, A.984. On Approving and Submitting for Ratification of Agreement on Permanent Representative Office of International Monetary Fund in Russian Federation Between Russian Federation Government and International Monetary Fund. Decree by RF Government of 18 February 1998, No.209. Ibid., 1998, No.8, A.985. On Fixing Percentage of Resources to Be Received as Payment for Registration of Rights for Real Estate and Transactions in It and for Providing Information on Registered Rights and to Be Channelled to Centralised Funds. Official Documents: Summary & Comments 57

Decree by RF Government of 21 February 1998, No.237. Ibid., 1998, No.9, A.1114. On Approving Statute on Interdepartment Commission for Working out Measures Connected with Activities of Justice Organisations for Registration of Rights and Bodies for Recording Units of Real Estate within System of State Registration of Rights for Real Estate and Transactions in It. Decree by RF Government of 21 February 1998, No.238. Statute on Interdepartment Commission for Working out Measures Connected with Activities of Justice Organisations for Registration of Rights and Bodies for Recording Units of Real Estate within System of State Registration of Rights for Real Estate and Transactions in It. Make up of Interdepartment Commission for Working out Measures Connected with Activities of Justice Organisations for Registration of Rights and Bodies for Recording Units of Real Estate within System of State Registration of Rights for Real Estate and Transactions in It. (Commission Chairman – F.R.Gazizullin, RF Deputy Prime Minister, RF Minister of State Property). Ibid., 1998, No.9, A.1115. On Measures for Solving Tasks of State Anti-monopoly Policies, Demonopolisation of Economy and Stimulation of Competition on Russian Federation’s Commodity Markets in 1998-2000. Decree by RF Government of 21 February 1998, No.239. Measures for Solving Tasks of State Anti-monopoly Policies, Demonopolisation of Economy and Stimulation of Competition on Russian Federation’s Commodity Markets in 1998-2000. Ibid., 1998, No.9, A.1116. On Approving Statute on Register of Russian Federation Organisations Invested with Right to Carry out Foreign Trade Operations in Respect of Weapon Products. Decree by RF Government of 21 February 1998, No.244. Statute on Register of Russian Federation Organisations Invested with Right to Carry out Foreign Trade Operations in Respect of Weapon Products. Ibid., 1998, No.9, A.1119. On Signing Agreement on Setting up «Formash» Interstate Financial-industrial Group Between Russian Federation Government and Government of Republic of Belarus. Decree by RF Government of 21 February 1998, No.243. Ibid., 1998, No.9, A.1128. On Setting Minimum Payment for State Registration of Rights for Real Estate and Transactions in It and Providing Information on Registered Rights. Decree by RF Government of 26 February 1998, No.248. Ibid., 1998, No.9, A.1121. On Submitting Draft Decree «On Improving «Orenburgskaia neftianaia aktsionernaia kompania» Open Joint Stock Company’s Structure» to Russian Federation President for His Approval. Decree by RF Government of 3 March 1998, No.262. Ibid., 1998, No.10, A.1205. On Procedure for Forming Target Investment Resources for Development of Atomic Power Industry in 1998. Decree by RF Government of 3 March 1998, No.279. Ibid., 1998, No.11, A.1285. 58 The Russian Economic Barometer, Vol VII, N 2, 1998

On Measures for Implementation of Decree by Russian Federation President of 3 March 1998, No.221 «On Preparatory Measures for Sale of «Neftianaia kompania «Rosneft» Open Joint Stock Company’s Shares». Decree by RF Government of 4 March 1998, No.263.(Introducing amendments to Decree by RF Government of 29 September 1995, No.971 «On Converting «Rosneft» State Enterprises into «Neftianaia kompania «Rosneft» Open Joint Stock Company - -Ibid., 1995, No.41, A.3902; 1997, No.17, A2021; No.20, A.2288; No.36, A4196 – and to the OJSC’s charter approved by decree of 29 September 1995, No.971). Amendments and Additions to Be Introduced to «Neftianaia kompania «Rosneft» Open Joint Stock Company’s Charter. Ibid., 1998, No.10, A.1199. On Approving Model Statute on Establishing Justice for State Registration of Rights for Real Estate and Transactions in It. Decree by RF Government of 6 March 1998, No.288. Model Statute on Establishing Justice for State Registration of Rights for Real Estate and Transactions in It. Ibid., 1998, No.11, A.1291. On Using Special Right («Golden share») for Participation of Russian Federation in Management of «Aktsionernaia kompania «Tulamashzavod» Open Joint Stock Company. Decree by RF Government of 6 March 1998, No.293. Ibid., 1998, No.11, A.1295. On Approving Conception of Restructuring of Russian Aircraft Industrial Complex. Decree by RF Government of 6 March 1998, No.294. Ibid., 1998, No.11, A.1296. Order by RF Government of 6 March 1998, No.306-r. (On elaborating system of small enterprise taxation). Appendix 1. Plan of Measures for Elaborating System of Small Enterprise Imputed Earnings Taxation. Appendix 2. Make up of Working Group for Arranging Activities and Control over Implementation of Measures for Elaborating System of Small Enterprise Imputed Earnings Taxation. (Head of the working group – E.G.Yasin, RF Ministry). Ibid., 1998, No.11, A.1310. On Attracting Financial Resources from International Capital Markets in 1998. Decree by RF Government of 14 March 1998, No.302. (On 1998 external bonds). Ibid., 1998, No.12, A.1440. On Setting Maximum Prices of Works (Services) Done (Rendered) by Federal State Unitary Enterprises. Decree by RF Government of 14 March 1998, No.316. Ibid., 1998, No.12, A.1448. Order by RF Government of 19 March 1998, No.359-r. (Approving Procedure for Conduct of Commercial Tender with Investment Conditions for Sale of «Neftianaia kompania «Rosneft» OJSC’s Shares Being in Federal Ownership in Amount of 75% of OJSC’s Charter Capital Plus 1 Share). Official Documents: Summary & Comments 59

Procedure for Conduct of Commercial Tender with Investment Conditions for Sale of «Neftianaia kompania «Rosneft» OJSC’s Shares Being in Federal Ownership (Moscow). Appendix 1. Investment Conditions of Tender. Appendix 2. Contract on Procedure for Fulfilling Investment Conditions of Tender and on Use of Investment Resources (Form). Ibid., 1998, No.12, A.1455. Order by RF Government of 19 March 1998, No.360-r. (On setting the amount of «Neftianaia kompania «Rosneft» OJSC’s charter capital at 90 179 359 thousand roubles in the 1997 prices and on setting the starting price of sale via commercial tender with investment conditions of the JSC’s stake of ordinary shares amounting to 75% of the charter capital plus 1 share; the cost of the stake is 12 795 300 thousand roubles). Ibid., 1998, No.12, A.1456. On Submitting Draft Decree «On Transferring 38 Percent of «Vyatsko-Polyanskii mashinostroitelnyi zavod «Molot» Joint Stock Company’s Shares to Trust Management of Central Company of «Tochnost» Transnational Financial-industrial Group» to Russian Federation President for His Approval. Decree by RF Government of 21 March 1998, No.337. Ibid., 1998, No.14, A.1616. On Measures for Securing Implementation of Presidential Programme «Government Housing Certificates». Decree by RF Government of 21 March 1998, No.320. Procedure for Issuing and Redeeming Government Housing Certificates to Be Distributed Among Servicemen Dismissed from Army, Other Citizens Dismissed from Army and Citizens to Be Re-settled from Closed and Isolated Military Townships. Ibid., 1998, No.14, A.1577. On Implementation of Measures for Restructuring of Railroad Transport of Russian Federation. Decree by RF Government of 21 March 1998, No.338. List of State Enterprises That Are Not Directly Involved in Traffic and Emergency and Restoration Works on Rail Transport and Are Subject to Removal from Railroad Transport System and Privatisation. (The list embraces 24 enterprises – 3 plants for maintenance of diesel locomotives in Astrakhan, Orenburg, Ufa; 4 plants for maintenance of carriages in Bogotop of Krasnoyarsk Krai, Vologda, Svobodnyi of Amursk Oblast, Tambov; 4 steel and mechanical plants in Volgograd, Morshansk of Tambov Oblast, Moscow, Petukhovo of Kurgan Oblast; 3 plants of electric technical devices in Gatchina of Leningrad Oblast, Samara, Saratov; 3 plants for maintenance electric locomotives in Ekaterinburg, Novosibirsk, Rostov-on-Don; plant for electromechanical devices in Elets of Lipetsk Oblast; mecanical plant in Ishim of Tyumen Oblast; plant of «Plastics» in Lubertsy of Moscow Oblast; 2 plants for maintenance of locomotives in Michurinsk of Tambov Oblast, Ussuriisk of Primorie Krai; Moscow electromechanical maintenance plant; St. Petersburg plant of electrotechnical devices). Ibid., 1998, No.14, A.1582. 60 The Russian Economic Barometer, Vol VII, N 2, 1998

On Approving Statute on Leasing Forest Plots. Decree by RF Government of 24 March 1998, No.345. (Recognising Decree by Council of Ministers-RF Government of 23 July 1993, No.712 – Sobranie aktov Prezidenta i Pravitelstva, 1993, No.32, A.3012 – as ineffective). Statute on Leasing Forest Plots. Sobranie zakonodatelstva Rossiiskoi Federatsii, 1998, No.14, A.1585. On Approving Procedure for Granting to Worker Collectives Privileges Stipulated by Decree of Russian Federation President «On Extending Rights of Worker Collectives Effective During Privatisation of Profitable Coal Mining Enterprises» of 28 April 1995, No.423. Decree by RF Government of 24 March 1998, No.349. Procedure for Granting to Worker Collectives Privileges Stipulated by Decree of Russian Federation President «On Extending Right of Worker Collectives Effective During Privatisation of Profitable Coal Mining Enterprises». Ibid., 1998, No.14, A.1586. On Approving Statute on Sale of State or Municipal Property at Auction. Decree by RF Government of 27 March 1998, No.356. Statute on Sale of State or Municipal Property at Auction. Ibid., 1998, No.14, A.1590. On Establishing Higher Patent Chamber under Russian Agency for Patents and Trade Marks. Decree by RF Government of 30 March 1998, No.367. Statute on Higher Patent Chamber under Russian Agency for Patents and Trade Marks. Ibid., 1998, No.14, A.1596. On Transferring «Kalmneft» Joint Stock Company’s Shares Being in Federal Ownership to Republic of Kalmykia. Decree by RF Government of 30 March 1998, No.371. (Transferring 38% of shares costing 43 million roubles on account of resources from privatisation and federal budget expenditures). Ibid., 1998, No.14, A.1599. On Creating Conditions for Attracting Investment to Innovations. Decree by RF Government of 31 March 1998, No.374. Ibid., 1998, No.14, A.1603. On Appointing State Representatives to Open Joint Stock Companies of Defence and Industrial Complex. Decree by RF Government of 7 April 1998, No.388. Appendix 1. List of State Representatives in Open Joint Stock Companies of Defence and Industrial Complex. (The list embraces 193 JSCs). Appendix 2. List of State Representatives Appointed to Board of Directors (Supervision Council) of Open Joint Stock Companies of Defence-industrial Complex. (The list embraces 197 JSCs). Ibid., 1998, No.15, A.1785. Official Documents: Summary & Comments 61

4 Selected Departmental Documents on Privatisation

On Procedure for Considering Documents Submitted to Territorial Agency of Bank of Russia for Registering Credit Organisations and Licensing Bank Activities. Instruction of RF Central Bank of 29 July 1997, No.493. Kurier, 1998, No.11, pp.57-80. On Introducing Additions to Decree by Federal Commission for Securities Market of 18 August 1997, No.25 «On Approving Statute on Procedure for Licensing Various Types of Professional Activities on Securities Market of Russian Federation» and on Approving New Wording of Statute on Procedure for Licensing Various Types of Professional Activities on Securities Market of Russian Federation. Decree by Federal Commission for Securities Market of 19 September 1997, No.26. (Recognising Statute on Procedure for Licensing Various Types of Professional Activities on Securities Market of Russian Federation approved by Decree by Federal Commission for Securities Market of 18 August 1997, No.25 as ineffective). Statute on Procedure for Licensing Various Types of Professional Activities on Securities Market of Russian Federation. Ekonomika i zhizn, 1997, No.41, pp.14-17. On Introducing Amendments to Statute on Procedure for Licensing Various Types of Professional Activities on Securities Market of Russian Federation Approved by Decree by Federal Commission for Securities Market of 19 September 1997, No.26 «On Introducing Additions to Decree by Federal Commission for Securities Market of 18 August 1997, No.25 «On Approving Statute on Procedure for Licensing Various Types of Professional Activities on Securities Market of Russian Federation» and on Approving New Wording of Statute on Procedure for Licensing Various Types of Professional Activities on Securities Market of Russian Federation». Decree by Federal Commission for Securities Market of 14 January 1998, No.2 Kurier, 1998, No.12, pp.33-41; Ekonomika i zhizn, 1998, No.11, pp.17-18. On Approving Statute on Procedure for Conduct of Forestry Tenders. Order by RF Federal Forestry Service of 30 September 1997, No.123. Registered by RF Ministry of Justice 26 December 1997, No.1438. Statute on Procedure for Conduct of Forestry Tenders for Leasing Forest Plots of Russian Federation. Bulleten normativnykh aktov, 1998, No.3, pp.5-11; Kurier, 1998, No.4, pp.82- 85. On Approving List of Educational Organisations Performing Training of Specialists in Securities Market That Are Accredited at Russia’s Federal Commission for Securities Market. Order by Federal Commission for Securities Market of 25 November 1997, No.1560-r. List of Educational Organisations Performing Training of Specialists in Securities Market That Are Accredited at Russia’s Federal Commission for Securities Market. (The list embraces 5 organisations in Moscow, 2 in St. Petersburg, 1 in Ekaterinburg, Cheliabinsk, Omsk, Novosibirsk, Irkutsk, 62 The Russian Economic Barometer, Vol VII, N 2, 1998

Samara, Nizhnii Novgorod, Rostov-on-Don, Vladivostok, Kazan, Saratov, Krasnoyarsk and Oryol each). Kurier, 1998, No.12, pp.44-45. On Approving Statute on Register of Subjects of Natural Monopolies in Fuel and Power Complex Regulated and Controlled by State. Decree by RF Federal Power Commission of 19 December 1997, No.127/7. Registered by RF Ministry of Justice 2 February 1998, No.1466. (Cancelling Statute approved 22 August 1997, No.103). Statute on Register of Subjects of Natural Monopolies in Fuel and Power Complex Regulated and Controlled by State. Bulleten..., 1998, No.5, pp.43-52; Kurier, 1998, No.11, pp.94-102. On Approving Provisional Statute on Clearing Activities on Securities Market of Russian Federation. Decree by RF Federal Commission for Securities Market of 30 December 1997, No.44. Provisional Statute on Clearing Activities on Securities Market of Russian Federation. Kurier, 1998, No.11, pp.82-84; Ekonomika i zhizn, 1998, No.9, p.13. On Approving «Procedure for Paying for Services of Natural Monopolies in Oil Transportation for 1998» and on Constant Component of Tariff for Transportation of Oil to Be Exported Through Main Oil Pipe-lines. Procedure for Paying for Services of Natural Monopolies in Oil Transportation for 1998. Kurier, 1998, No.12, pp.46-47. On Approving Statute on Procedure for Suspending Issuance of Securities and Recognising It as Invalid or Ineffective and on Additions to Acts of Federal Commission for Securities Market. Statute on Procedure for Suspending Issuance of Securities and Recognising It as Invalid or Ineffective. Kurier, 1998, No.11, pp.85-93; Ekonomika i zhizn, 1998, No.8, pp.19-21. Review of Practices of Considering by Arbitration Courts Disputes Resulting from Application of Russian Federation Civil Code Provisions on Pledge. Kurier, 1998, No.7, pp.63-66; Ekonomika i zhizn, 1998, No.7, p.17. Review of Practices of Considering by Arbitration Courts Disputes Resulting from Application of Russian Federation Civil Code Provisions on Bank Guarantee. Kurier, 1998, No.7, pp.67- 69; Ekonomika i zhizn, 1998, No.7, p.19. Review of Practices of Considering by Arbitration Courts Disputes Resulting from Application of Russian Federation Civil Code Provisions on Warranty. Kurier, 1998, No.6, pp.38-42; Ekonomika i zhizn, 1998, No.7, p.18. On Approving Statute (Joint with Russian Federation Central Bank) on Peculiarities of and Restrictions on Combining Broker or Dealer Activities and Activities for Securities Trust Management with Operations in Sphere of Centralised Clearing, Depository and Settlement Services. Decree by Federal Commission for Securities Market of 20 January 1998, No.3. Statute on Peculiarities of and Restrictions on Combining Broker or Dealer Activities with Activities for Securities Trust Management with Official Documents: Summary & Comments 63

Operations on Centralised Clearing, Depository and Settlement Services. Approved by Decree by Federal Commission for Securities Market of 20 January 1998, No.3 and by Letter from Bank of Russia No.16-P of 22 January 1998. Kurier, 1998, No.12, pp.42-43; Ekonomika i zhizn, 1998, No.7, p.13. On Some Issues of Applying Federal Law «On Transfer and Promissory Notes». Decree by Plenum of RF Higher Court and Plenum of RF Higher Arbitration Court of 5 February 1998, No.3/1. Kurier, 1998, No.11, pp.53-54; Rossiiskaia gazeta, 5 May 1998, p.6; Ekonomika i zhizn, 1998, No.10, p.16. On Issuing Savings Bonds of Russian Federation Government of Twenty Fifth Series. Order by RF Ministry of Finance of 11 February 1998 No.9n. Registered by RF Ministry of Justice 23 February 1998, No.1477. Terms of Issuance of Savings Bonds of Russian Federation Government of Twenty Fifth Series. Order by RF Ministry of Finance of 11 February 1998, No.9n. Registered by RF Ministry of Justice 23 February 1998, No.1477. Terms of Issuing Savings Bonds of Russian Federation Government of Twenty Fifth Series. Order by RF Ministry of Finance of 11 February 1998 No.9n. Registered by RF Ministry of Justice 23 February 1998, No.1477. Terms of Issuance of Savings Bonds of Russian Federation Government of Twenty Fifth Series. Bulleten..., 1998, No.6, pp.12-14; Kurier, 1998, No.12, pp.52-53; Ekonomika i zhizn, 1998, No.11, p.16. On Issuing Savings Bonds of Russian Federation Government of Twenty Sixth Series. Order by RF Ministry of Finance of 11 February 1998 No.10n. Registered by RF Ministry of Justice 23 February 1998, No.1478. Terms of Issuance of Savings Bonds of Russian Federation Government of Twenty Sixth Series. Order by RF Ministry of Finance of 11 February 1998, No.10n. Registered by RF Ministry of Justice 23 February 1998, No.1478. Terms of Issuing Savings Bonds of Russian Federation Government of Twenty Sixth Series. Bulleten..., 1998, No.7, pp.7-9; Kurier, 1998, No.12, pp.69-70; Ekonomika i zhizn, 1998, No.12, p.11. On Applying Arrest of Money Resources of Credit Organisations by Arbitration Courts as Measure for Securing Suits. Information Letter from Presidium of RF Higher Arbitration Court of 25 February 1998, No.31. Kurier, 1998, No.11, p.56; Ekonomika i zhizn, 1998, No.11, p.16. On Introducing Amendments and Additions to Instruction of Russia’s State Tax Agency of 17.04.95, No.29 «On Applying Russian Federation Law «On Payment for Land». Order by RF State Tax Agency of 27 February 1998, No.AP-3-04/31. Registered by RF Ministry of Justice 2 April 1998, No.1500. Amendments and Additions No.4 to Instruction of Russia’s State Tax Agency of 17.04.95, No.29 «On Applying Russian Federation Law «On Payment for Land». Ekonomika i zhizn, 1998, No.16, p.18. 64 The Russian Economic Barometer, Vol VII, N 2, 1998

Statute on Procedure of Providing Loans, Guaranteed by Government Securities, to Banks by Bank of Russia. Approved by RF Central Bank 6 March 1998, No.19-p. Kurier, 1998, No.12, pp.21-31. On Bringing Charter Documents and Organisation-legal Forms in Compliance with Federal Law «On Limited Liability Companies» by Credit Organisations. Instruction of RF Central Bank of 12 March 1998, No.184-u. Ekonomika i zhizn, 1998, No.13, p.17. Statute on Taxation Issues Connected with 1998 External Bonds of Russian Federation. Approved by RF Ministry of Finance 17 March 1998, No.14n and RF State Tax Agency No.AP-4-06/3n. Registered by RF Ministry of Justice 20 March 1998, No.1496. Ekonomika i zhizn, 1998, No.14, p.11. Review of Practices of Considering Disputes Resulting from Application of Anti-monopoly Legislation. Information Letter from Presidium of RF Higher Arbitration Court of 30 March 1998, No.32. Ekonomika i zhizn, 1998, No.16, pp.15-18.

SURVEY STATISTICS

OUTLINE OF REB SURVEYS A. COVERAGE OF SURVEYS Since December 1991, the «Russian Economic Barometer» has been conducting monthly panel surveys of Russian enterprise managers and bimonthly (till 1993 — quarterly) surveys of bankers. The sample comprises about 1,000 units: 500 industrial enterprises, 300 agricultural ones, and 150 commercial banks throughout Russia. The response rate for each sector varies in the range of 30-40%, 20-30%, and 25-30% correspondingly.

Industrial enterprises selected for the sample are situated rather evenly over the territory of Russia. The majority of them belong to manufacturing. The branch distribution in the sample (see Table 1) is representative for Russia as a whole. Most of the enterprises surveyed are medium-scale (by Russian standards), with the number employed from 150 to 2,000. For 1997, the average number employed was about 645 (see Tables 2 and 3). During 1992 — 1997, the status of many of the participants surveyed changed: the share of state enterprises among them decreased from 82% to 15%. The number of industrial enterprises reporting monthly equals 160-200.

Agricultural enterprises selected for the sample are from over 30 out of 80 regions of Russia. The sample includes mainly medium-scale enterprises with the number employed in the range of 100-500. 50% of the surveyed enterprises specialised chiefly in plant-growing, and 50% — in animal husbandry. The number of every month respondents-agricultural enterprises equals 50-70.

Banks selected for the sample are situated in 25 regions of Russia. Most of them are medium and large scale banks (by Russian standards) (see Table 4). More than half of the banks sampled is represented by the so-called «new commercial banks» which emerged in the past 6 years. The others were formed on the basis of regional branches of the former state specialised banks. The number of bimonthly respondents equals 30-40 units. 66 The Russian Economic Barometer, Vol VII, N 2, 1998 Table 1 Distribution of the manufacturing enterprises in REB sample by branches, classification of Eurostat (% of the total number) 1992 1993 1994 1995 1996 1997 I. Consumer goods 38 41 40 39 35 36 1. textile industry 4 5 6 5 5 6 2. leather, footwear, & clothing industries 7 9 8 7 7 7 3. wooden furniture, paper products, printing, & publishing industries 6 7 5 5 4 4 4. plastic processing industry 1 1 <1 1 0 <1 5. fine ceramics & glass industry 2 2 1 1 <1 <1 6. Food, drink, & tobacco industries 18 18 20 20 19 19 II. Investment goods 34 32 34 35 36 33 7. metals processing industry 4 6 8 7 8 6 8. mechanical & precision engineering industries 18 16 15 13 14 13 9. electrical engineering, office & data-processing machinery manufacturing industries 9 7 6 8 7 8 10. motor vehicles & other means of transport manufacturing industries 3 3 5 7 7 6 III. Intermediate goods 28 28 26 26 29 31 11. woodworking & paper manufacturing 10 10 8 7 8 8 industries 12. ferrous & non-ferrous metals manufacturing industries 3 4 4 2 2 3 13. construction materials, industrial ceramics & glass manufacturing industries 12 11 10 13 15 16 14. oil-processing, chemical, man-made fibre & rubber products manufacturing industries 3 3 3 4 4 4 Manufacturing industry on the whole 100 100 100 100 100 100

Survey Statistics 67

Table 2 Breakdown of REB sample of industrial enterprises by number of employers (% of the total sample) people 1992 1993 1994 1995 1996 1997 <200 24 25 27 30 34 37 200-500 27 31 31 30 28 29 500-1000 23 20 19 18 17 16 1000< 26 24 23 22 21 18 100 100 100 100 100 100

Table 3 Average number of employers at industrial enterprises by size (REB sample, people) people 1992 1993 1994 1995 1996 1997 <200 125 133 134 129 129 123 200-500 350 337 342 345 348 335 500-1000 765 731 750 751 726 740 1000< 3387 3453 2747 2556 2787 2134 Entire sample 1174 1118 917 840 850 645

Table 4 Distribution of commercial banks by the size of their share capital (% of the total number, January 1998) Share capital, mln rubbles "REB" sample Russia as a whole * less than 499 6 12 500-999 6 7 1,000-4,999 35 29 5,000-20,000 32 36 more than 20,000 21 17 *Source: Central Bank of Russia B. CONTENTS OF QUESTIONNAIRE The managers polled reported the main performance characteristics of their enterprises and banks, as well as answering a number of specific questions concerning the impact of governmental economic policy, privatisation process, and influence of the overall changes in economic environment on their activities and prospects, etc. this strange. 68 The Russian Economic Barometer, Vol VII, N 2, 1998

C. DATA AGGREGATING METHODS In the majority of cases, the respondents were asked to select the most appropriate interval for the indicator to be measured. When treating the survey data the mean value was chosen for each interval. In case of extremes, the continuation of the adopted gradation was assumed and on this basis the same method was used. In other cases, when respondents were to choose one situation out of several, the results represent simple addition of reports from individual units.

OUTLINE OF INIOR-HSE SURVEYS The Institute for Organised Markets Research (INIOR) has been conducting monthly business trends’ surveys of Moscow private distributors (trading both on their own account and on the account of suppliers) since the beginning of 1992. Since November 1993, these surveys are carried out on the basis of the Higher School of Economics (HSE) and answers to the questionnaires are being provided by private wholesalers of Moscow. The initial sample was formed on the basis of data from advertisements in the central newspapers. In November 1993 practically the whole sample was renewed. The work was carried out by the «NEKS SV» firm by analysing all the advertisements sized over 1/32 of the standard paper type page of the A-2 format and placed in 20 top central papers over three months. Five commodity groups were formed in the sample, namely, «computers, office equipment, consumer electronics», «cars», «consumer goods», «foodstuffs», «furniture» which in total comprised 400 firms that advertise the most. The number of firms in each commodity group was proportional to their share in the total volume of advertisements. In May 1994, the sample was enlarged by including two new commodity groups, i.e., «ferrous metals and metal goods» and «building materials». After that a part of the sample was regularly renewed according to the mentioned procedure. Last time it occurred in January 1996. The time (half-year) has been extended and the number of papers, used for the analysis of advertisements, was increased. At present the sample comprises over 700 firms. Although all the surveyed trade firms are located in Moscow, their responses to a certain extent characterise the state of the Russian commodity market on the whole. This ensues from the fact that the INIOR-HSE respondents sell a quite significant share of their goods outside Moscow and the Moscow Region (see Table). Survey Statistics 69

Table 1 Geography of the respondents’ trade activity, February 1996 The firm sells its goods exclusively in in the European in Russia in Russia Moscow and Moscow part of Russia as a whole and CIS Region Share in the total 12.6 10.2 37.6 39.6 number of firms (%) The average share of sales outside Moscow and Moscow Region makes 35%. The surveys are conducted by phone during the last week of the accounting month. The surveys are carried out on the basis of a standard questionnaire for wholesale and retailing elaborated at the ifo-Institute. Respondents are invited to estimate the current and future changes in the basic economic indicators at their firms as «more/less», «better/worse». Besides standard ones the HSE questionnaire includes various special questions put to respondents at definite intervals. And since May 1995, quantitative questions on actual and anticipated changes in rubble and currency disbursing prices are asked monthly. At the end of 1993 the surveys covered about 90 firms, in May 1994 their number reached 166, and now they are already 300 in all.

CLARIFICATION TO THE SERIES

By the way they are constructed the indicators published in the bulletin may be divided into several groups. Below in the description of these ways, numbers of respective series are indicated.

1. Indicators calculated as «portion of enterprises». Such indicators are calculated as

at = (At / Nt )* 100% , (1) where Nt is the total number of enterprises which answered to the respective question during the month t; At is the number of enterprises which answered in the positive. Like all the other cases such indicators are calculated without weighting by enterprise size (if no special reservation is made).

In this way the following series are constructed: 19, 20, 32, 41, 42, 44, 45, 61, 62, 63, 64, 65, 66, 72. 70 The Russian Economic Barometer, Vol VII, N 2, 1998

2. Indicators like «limiting factor» are built similarly to the first type for each factor separately. In this case At denotes the number of enterprises which marked this factor as one of major constraints of production (investment etc.). The questionaire usually lists 10-12 factors (A, B, C, ...) and invites to choose 3 major ones. Respectively the sum a+b+c+ ... may exceed 100%. Its theoretical maximum (when 3 options are marked) is 300%. However in the REB surveys this sum is practically always lower.

In this way the following series are constructed: 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 101, 102, 103, 104, 105.

3. Diffusion index (DI) is a more complex variant of «portion of enterprises». It is used to assess the incidence (diffusion) of the indicator’s change. It is calculated as

Dt =[(At + 0.5Bt) / Nt ]*100% (2) where At is the number of enterprises which reported an increase of the indicator, Bt is the number of those which reported it unchanged and Nt is the total number of enterprises which sent their answers at time t.

Time span when a change is recorded to calculate DI may be different. Its duration is always indicated after the indicator’s name (a month, 3 months, half a year, a year). And these may be periods both of the past (back from the moment of the survey) and of the future. Respectively the change is either actual or anticipated.

The following series are constructed in this way: 1, 2, 3, 4, 5, 6, 7, 8, 10, 11, 14, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30.

Series 10 and 11 are constructed in the similar way with the only difference that to assess the direction of their change respondents must use the scale «worsened - remained the same - improved» instead of the scale «reduced-remained the same- increased».

Series 3 and 23 are derivative and obtained as a combination of the pairs 1-2 and 21-22 respectively.

4. Balance indicators are defined as

St =[(At – Ct ) /Nt ]*100% , (3) Survey Statistics 71 where At is the number of enterprises which reported an increase of the indicator, Ct is the number of those which reported its reduction and Nt is the total number of answers to the question.

Balance and diffusion indices are related as

S = 2D – 100 . (4) In this way the INIOR-HSE series 81-87 are constructed.

5. Direct assessments. Some indicators are obtained directly from respondents’ assessments. The scale of their measurement (percent, years, portion) is usually indicated in the series title.

Series 18, 31, 47, 71 and 73 are of this type.

6. Conventional assessments. They are obtained similarly to the direct ones with the only difference that magnitude of change to be assessed is measured on a conventional scale, as a rule in relation to a normal level taken by respondents for 100%.

In this way series 13, 15, 16, 17, 33 are constructed.

(To be continued) 72 The Russian Economic Barometer, Vol VII, N 2, 1998 REB INDEXES The following tables are based on the results of monthly surveys of Russian enterprises conducted by the «REB» (Program Director — S. Aukutsionek, Data Base Designer — N. Dyomina).

Year Jan. Feb. Mar. Apr. May June July Aug. Sept Oct. Nov. Dec. Annual 1. Diffusion index of output prices, industry, actual (percent rising over 1-month spans) 1. Диффузный индекс цен на выпускаемую продукцию, промышленность, фактические изменения (доля предприятий с растущим за 1 месяц показателем) 1991 88 – 1992 97 70 72 67 68 64 66 57 67 75 80 73 71 1993 84 83 83 83 78 78 82 83 85 80 76 74 81 1994 79 75 68 77 74 61 69 73 71 81 77 80 74 1995 90 83 81 83 77 72 72 74 76 70 62 59 75 1996 66 64 57 57 52 52 51 54 52 52 54 54 55 1997 53 52 53 49 48 49 48 52 49 50 48 49 50 1998 49 46 43 43 2. Diffusion index of input prices, industry, actual (percent rising over 1-month spans) 2. Диффузный индекс цен на покупаемую продукцию, промышленность, фактические изменения (доля предприятий с растущим за 1 месяц показателем) 1991 99 – 1992 97 94 91 87 89 90 85 82 85 89 93 89 89 1993 95 93 94 96 94 92 91 94 96 94 95 92 94 1994 95 95 94 97 96 92 94 93 93 97 94 95 95 1995 98 97 96 97 95 93 92 93 94 90 87 87 93 1996 89 86 87 84 84 81 80 80 84 79 79 74 82 1997 74 77 80 77 74 75 75 78 64 64 62 66 72 1998 63 59 60 60 3. Diffusion index of output and input prices combined, industry, actual (percent rising over 1-month spans) 3. Комбинированный диффузный индекс цен на выпускаемую и покупаемую продукцию, промышленность, фактические изменения (доля предприятий с растущим за 1 месяц показателем) 1991 94 – 1992 97 82 82 77 78 77 76 70 76 82 86 81 80 1993 88 87 89 89 86 85 86 88 90 87 86 83 87 1994 87 85 81 87 85 77 82 83 82 89 86 88 84 1995 94 90 88 90 86 82 82 83 85 80 74 73 84 1996 77 75 72 71 68 66 65 67 68 65 66 64 69 1997 64 64 66 63 61 62 61 65 56 57 55 57 61 1998 56 53 51 51 Survey Statistics 73

4. Diffusion index of wages, industry, actual (percent rising over 1-month spans) 4. Диффузный индекс заработной платы, промышленность, фактические изменения (доля предприятий с растущим за 1 месяц показателем) 1991 92 – 1992 94 78 77 65 66 81 69 60 67 72 73 77 73 1993 75 79 80 84 82 81 82 76 77 74 67 67 77 1994 62 52 56 60 55 60 63 58 61 68 67 69 61 1995 60 64 67 68 64 70 69 66 65 62 55 54 64 1996 47 57 50 50 42 49 48 45 46 48 37 43 47 1997 41 43 51 50 46 57 54 51 53 49 39 45 48 1998 40 47 43 43 5. Diffusion index of employment, industry, actual (percent rising over 1-month spans) 5. Диффузный индекс занятости, промышленность, фактические изменения (доля предприятий с растущим за 1 месяц показателем) 1991 55 – 1992 53 41 37 36 32 30 28 27 26 30 31 30 33 1993 33 32 35 33 35 32 40 33 37 32 30 29 33 1994 30 26 26 27 22 24 22 21 24 22 25 33 25 1995 34 33 34 33 32 35 39 33 37 32 33 29 34 1996 27 29 26 31 29 30 29 24 25 27 30 28 28 1997 30 31 30 33 31 38 32 35 35 31 37 38 33 1998 35 37 33 33 6. Diffusion index of output, industry, actual (percent rising over 1-month spans) 6. Диффузный индекс выпуска, промышленность, фактические изменения (доля предприятий с растущим за 1 месяц показателем) 1992 44 42 39 48 36 36 37 31 31 48 35 54 40 1993 35 51 55 49 46 43 43 40 47 40 32 37 43 1994 31 35 32 32 26 38 29 39 34 41 41 40 35 1995 31 46 47 33 38 46 42 45 35 39 28 31 38 1996 29 41 32 36 30 32 31 30 30 37 26 36 32 1997 20 34 44 39 35 43 41 36 47 41 36 51 39 1998 28 43 43 38 7. Diffusion index of order-book level, industry, actual (percent rising over 1-month spans) 7. Диффузный индекс портфеля заказов, промышленность, фактические изменения (доля предприятий с растущим за 1 месяц показателем) 1991 61 – 1992 32 29 29 30 25 32 27 31 31 42 40 48 33 1993 41 49 46 42 45 44 36 37 46 35 34 34 41 1994 33 33 31 31 31 40 36 41 43 39 41 47 37 1995 44 44 42 42 43 48 42 45 38 34 31 31 40 1996 32 36 31 33 36 37 32 34 35 35 31 37 34 1997 34 40 47 46 44 41 44 45 45 42 44 42 43 1998 42 42 41 41 74 The Russian Economic Barometer, Vol VII, N 2, 1998

8. Diffusion index of stocks of finished products, industry, actual (percent rising over 1-month spans) 8. Диффузный индекс запасов готовой продукции, промышленность, фактические изменения (доля предприятий с растущим за 1 месяц показателем) 1992 56 76 75 72 70 67 73 66 62 58 53 51 65 1993 56 55 61 57 57 58 48 64 57 69 61 67 59 1994 59 61 61 65 55 50 44 47 43 41 39 38 50 1995 48 46 55 49 50 44 43 46 50 56 52 60 50 1996 58 57 56 56 50 52 46 44 43 49 43 47 50 1997 44 40 51 46 42 41 36 38 37 45 43 43 42 1998 44 51 52 46 10. Diffusion index of output/input prices ratio, industry, actual (percent rising over 1-month spans) 10. Диффузный индекс отношения цен на выпускаемую продукцию, промышленность, фактические изменения (доля предприятий с растущим за 1 месяц отношением) 1992 42 44 41 24 31 28 28 29 27 29 32 – 1993 28 31 28 23 25 22 21 25 28 21 24 26 25 1994 21 24 18 28 23 25 23 31 27 26 23 30 25 1995 25 27 29 30 28 29 29 33 33 32 27 33 30 1996 29 35 32 33 34 36 35 34 36 35 36 39 34 1997 39 36 37 38 39 41 39 40 42 44 42 40 40 1998 41 41 39 42 11. Diffusion index of credit terms, industry, actual (percent improving over 1-month spans) 11. Диффузный индекс условий получения банковских кредитов, промышленность, фактические изменения (доля предприятий с улучашающимися за 1 месяц условиями) 1991 38 – 1992 27 18 15 14 9 17 24 29 35 40 35 43 25 1993 38 29 33 30 29 27 20 20 25 22 19 18 26 1994 24 25 29 33 35 43 49 51 49 42 34 36 38 1995 32 35 39 40 44 49 48 47 42 37 44 42 42 1996 39 44 41 43 38 43 35 37 38 44 40 44 40 1997 43 47 46 47 46 51 47 49 50 47 39 36 46 1998 31 32 38 40 14. Diffusion index of expenditures for equipment, industry, actual (percent rising over 1- month spans) 14. Диффузный индекс закупок оборудования, промышленность, фактические изменения (доля предприятий с растущим за 1 месяц показателем) 1993 24 22 28 19 30 20 27 22 23 20 21 23 23 1994 23 17 15 16 15 16 18 20 18 14 20 23 18 1995 19 17 21 20 19 24 25 18 20 22 21 19 20 1996 17 18 17 16 16 15 17 15 15 15 18 19 16 1997 15 17 13 12 21 18 14 17 24 21 20 18 18 1998 18 19 17 16 Survey Statistics 75 21. Diffusion index of output prices, industry, anlicipated (percent rising over 3-month spans) 21. Диффузный индекс цен на выпускаемую продукцию, промышленность, ожидаемые изменения (доля предприятий с растущим за 3 месяца показателем) 1992 – – – – – – 78 86 74 78 84 91 – 1993 95 94 94 93 94 94 89 94 95 89 98 95 94 1994 95 95 96 91 93 88 91 86 86 91 93 92 91 1995 93 94 95 96 92 91 89 90 91 95 91 89 92 1996 90 89 90 88 88 81 73 77 75 79 75 77 82 1997 73 74 78 69 70 67 65 64 60 64 66 65 68 1998 63 66 67 56 50 52 48 22. Diffusion index of input prices, industry, anlicipated (percent rising over 3-month spans) 22. Диффузный индекс цен на покупаемую продукцию, промышленность, ожидаемые изменения (доля предприятий с растущим за 3 месяца показателем) 1992 – – – – – – 89 94 91 91 92 97 – 1993 100 97 98 99 98 97 97 95 97 91 99 99 97 1994 99 97 99 98 99 95 99 98 95 98 97 98 98 1995 99 99 95 98 99 97 98 97 97 99 96 95 97 1996 95 95 98 96 96 95 92 93 92 92 92 93 94 1997 93 92 90 90 88 88 85 82 83 86 84 85 87 1998 83 82 87 78 69 70 64 23. Diffusion index of output and input prices combined, industry, anlicipated (percent rising over 3-month spans) 23. Комбинированный диффузный индекс цен на выпускаемую и покупаемую продукцию, промышленность, ожидаемые изменения (доля предприятий с растущим за 3 месяца показателем) 1992 – – – – – – 84 90 82 85 88 94 – 1993 98 96 96 96 96 96 93 94 96 90 98 97 96 1994 97 96 97 94 96 91 95 92 91 95 95 95 94 1995 96 96 95 97 95 94 93 93 94 97 93 92 95 1996 92 92 94 92 92 98 83 85 83 85 83 85 89 1997 83 83 84 80 79 77 75 73 71 75 75 75 77 1998 73 74 77 67 59 61 56 24. Diffusion index of wages, industry, anticipated (percent rising over 3-month spans) 24. Диффузный индекс заработной платы, промышленность, ожидаемые изменения (доля предприятий с растущим за 3 месяца показателем) 1992 – – – – – – 72 78 76 83 82 85 – 1993 85 84 88 87 87 94 91 91 92 84 93 87 86 1994 85 91 89 82 80 77 77 74 77 78 75 80 80 1995 83 86 90 86 84 84 87 83 85 87 84 79 85 1996 81 77 75 71 76 70 66 66 64 58 56 54 68 1997 54 55 61 58 58 60 62 56 58 55 55 56 57 1998 47 55 53 55 50 53 49 76 The Russian Economic Barometer, Vol VII, N 2, 1998

25. Diffusion index of employment, industry, anticipated (percent rising over 3-month spans) 25. Диффузный индекс занятости, промышленность, ожидаемые изменения (доля предприятий с растущим за 3 месяца показателем) 1992 – – – – – – 34 28 27 25 22 25 – 1993 24 22 32 30 32 33 33 36 34 34 33 33 31 1994 27 26 27 24 25 23 22 19 19 20 19 20 23 1995 25 28 27 32 32 34 34 32 34 35 33 30 31 1996 29 27 28 28 30 24 27 25 25 23 21 23 26 1997 21 25 22 25 26 33 35 32 33 30 33 34 29 1998 26 30 34 38 39 34 37 26. Diffusion index of output, industry, anticipated (percent rising over 3-month spans) 26. Диффузный индекс выпуска, промышленность, ожидаемые изменения (доля предприятий с растущим за 3 месяца показателем) 1992 – – – – – – 39 33 38 32 33 30 – 1993 34 37 47 46 48 48 45 46 49 40 37 42 43 1994 36 33 33 37 39 29 37 35 33 37 36 30 36 1995 31 41 40 48 46 47 48 42 47 43 44 44 43 1996 34 37 39 42 45 37 42 41 40 33 30 27 37 1997 30 34 33 43 44 47 46 47 48 40 46 41 42 1998 31 43 49 55 48 44 45 27. Diffusion index of expenditures for equipment, industry, anticipated (percent rising over 3-month spans) 27. Диффузный индекс закупок оборудования, промышленность, ожидаемые изменения (доля предприятий с растущим за 3 месяца показателем) 1993 – – – 32 28 33 28 33 22 28 24 25 – 1994 20 25 22 21 20 19 17 21 19 20 25 19 21 1995 20 23 24 25 22 31 28 26 27 23 19 22 24 1996 23 24 22 26 25 25 18 19 19 21 14 14 21 1997 17 17 17 18 21 20 17 19 23 23 20 24 20 1998 23 22 26 25 23 22 21 28. Diffusion index of financial situation, industry, anticipated (percent improving over 3- month spans) 28. Диффузный индекс финансового состояния, промышленность, ожидаемые изменения (доля предприятий, у которых оно улучшится через 3 месяца) 1993 – – – – 45 42 41 40 36 38 43 43 – 1994 30 34 38 36 32 33 29 33 32 29 41 35 34 1995 32 31 39 39 36 41 42 40 42 40 38 32 38 1996 38 33 38 38 41 38 39 41 37 29 28 26 36 1997 27 31 36 39 41 39 42 40 43 37 38 40 38 1998 31 34 41 44 45 43 45 Survey Statistics 77

29. Diffusion index of order-book level, industry, anticipated (percent rising over 3-month spans) 29. Диффузный индекс портфеля заказов, промышленность, ожидаемые изменения (доля предприятий с растущим за 3 месяца показателем) 1994 – – – 48 50 46 47 42 47 47 45 45 – 1995 45 49 52 50 56 53 51 47 51 47 45 45 49 1996 43 46 53 55 56 53 52 50 49 39 40 38 48 1997 39 40 48 54 56 55 55 51 50 45 45 47 49 1998 37 48 54 61 54 59 54 30. Diffusion index of indebtedness to banks, industry, anticipated (percent rising over 3- month spans) 30. Диффузный индекс задолженности банкам, промышленность, ожидаемые изменения (доля предприятий с растущим за 3 месяца показателем) 1994 – – – 50 44 45 48 47 53 44 40 41 – 1995 45 44 40 42 35 37 36 34 36 31 36 35 38 1996 33 37 39 43 40 41 33 36 36 40 40 38 38 1997 39 43 32 35 34 36 32 31 31 26 29 31 33 1998 33 31 30 29 30 31 23 13. Capacity utilization rate, industry (usual monthly level = 100) 13. Загрузка производственных мощностей, промышленность (нормальный месячный уровень = 100) 1991 78 – 1992 70 64 70 77 79 75 71 70 75 72 77 75 73 1993 75 76 78 76 76 72 73 74 72 72 71 69 74 1994 67 67 63 61 58 55 57 61 61 62 61 64 61 1995 59 60 63 62 60 59 62 58 61 61 61 57 60 1996 56 54 55 56 54 56 57 51 55 52 54 54 54 1997 52 50 51 51 55 54 53 57 57 57 57 60 54 1998 55 55 57 55 15. Labour utilization rate, industry (usual monthly level = 100) 15. Загрузка наличной рабочей силы, промышленность (нормальный месячный уровень = 100) 1994 75 76 73 74 72 69 73 75 76 78 78 79 75 1995 78 76 81 78 75 78 78 79 78 78 77 73 77 1996 73 73 73 75 72 75 76 69 72 70 71 72 73 1997 69 72 73 74 75 74 74 76 78 77 76 78 75 1998 74 75 78 77 16. Stocks of finished products, industry (usual monthly level = 100) 16. Запасы готовой продукции, промышленность (нормальный месячный уровень = 100) 1993 83 92 82 95 91 91 87 95 83 97 109 104 92 1994 101 103 104 116 107 96 93 84 75 89 84 78 94 1995 81 74 82 90 78 77 74 78 78 89 88 96 82 1996 95 101 93 103 97 102 94 91 86 90 84 88 94 1997 90 88 99 95 92 90 83 82 81 79 86 82 87 1998 83 91 90 92 78 The Russian Economic Barometer, Vol VII, N 2, 1998

17. Order-book level, industry (usual monthly level = 100) 17. Портфель заказов, промышленность (нормальный месячный уровень = 100) 1993 82 91 83 82 86 81 83 78 79 76 72 74 81 1994 71 70 65 66 66 65 65 72 73 72 75 74 70 1995 74 70 74 73 70 73 74 68 71 68 67 66 71 1996 62 61 61 66 64 70 63 59 63 59 59 61 62 1997 58 56 59 59 63 64 63 66 67 67 69 68 63 1998 67 66 65 67 18. Share of barter in sales, industry (%) 18. Доля бартера в продажах, промышленность (%) 1992 – 8 6 5 4 5 6 9 5 5 6 6 – 1993 7 7 6 8 8 9 9 9 9 10 11 11 9 1994 12 14 17 16 17 18 20 19 19 17 17 18 17 1995 19 20 18 17 22 22 21 23 25 25 24 26 22 1996 30 29 31 31 33 38 36 37 37 39 39 40 35 1997 38 41 40 45 40 42 45 43 42 39 45 47 42 1998 50 46 50 50 19.Share of enterprises in 'good' or 'normal' financial conditions , industry (%) 19. Доля предприятий в "хорошем" или "нормальном" финансовом состоянии, промышленность (%) 1993 42 41 46 44 43 41 42 31 37 28 19 21 36 1994 21 20 18 19 19 23 18 25 24 27 33 35 24 1995 27 25 36 29 28 29 32 26 28 23 17 19 27 1996 12 16 15 14 14 13 19 15 19 15 17 17 16 1997 18 18 17 17 18 24 20 24 31 32 25 27 23 1998 24 19 21 17 20. Share of enterprises not buying equipment for 2 and more months, industry (%) 20. Доля предприятий, не закупающих оборудование 2 и более месяцев подряд, промышленность (%) 1993 50 49 47 62 48 57 50 57 53 58 56 54 53 1994 53 65 67 69 65 65 60 58 64 65 60 55 62 1995 61 65 57 59 61 50 55 60 58 54 61 58 58 1996 64 62 65 67 63 69 65 68 66 67 66 66 66 1997 70 68 72 74 63 63 70 67 57 56 61 63 65 1998 60 65 64 66 31. Anticipated interest rates on bank credits to be received in the course of 3 months, industry (% in annual basis) 31. Процентные ставки по банковским кредитам, привлекаемым в ближайшие три месяца, промышленность (% в годом исчислении) 1994 199 201 222 199 206 165 158 133 128 140 144 164 172 1995 163 166 163 170 156 152 130 128 140 136 144 130 148 1996 124 121 111 109 112 101 106 89 82 76 64 58 96 1997 48 47 43 40 34 29 28 27 23 25 25 23 33 1998 26 26 23 23 Survey Statistics 79

32. Share of enterprises not indebted to banks and not going to be indebted in the course of 3 months, industry (%) 32. Доля предприятий, у которых задолженности банкам нет и не ожидается в ближайшие три месяца, промышленность (%) 1994 21 23 20 19 24 17 24 21 26 21 21 31 22 1995 25 27 23 31 32 28 35 23 27 30 30 26 28 1996 31 32 27 34 33 32 33 28 34 30 32 42 32 1997 34 36 36 33 42 40 41 37 38 40 40 38 38 1998 43 43 43 49 33.Indebtedness to banks, industry (usual monthly level = 100) 33.Задолженность банкам, промышленность (нормальный месячный уровень = 100) 1996 107 109 104 117 127 115 108 124 111 130 133 130 118 1997 128 120 112 112 107 114 112 115 114 95 92 95 110 1998 99 109 99 91

Year I Q II Q III Q IV Q Annual Year I Q II Q III Q IV Q Annual 41. Share of managers comprehending the 42. Share of managers not comprehending government economic policy of the previous the government economic policy of the 3-4 months, industry (% of respondents) previous 3-4 months, industry (% of respondents) 41. Доля руководителей, понимающих 42. Доля руководителей, не понимающих экономическую политику правительства за экономическую политику правительства за последние 3-4 месяца, промышленность последние 3-4 месяца, промышленность (%) (%) 1992 49 47 32 – 1992 45 42 49 – 1993 24 33 25 23 26 1993 51 38 52 40 45 1994 20 11 19 15 16 1994 56 69 54 62 60 1995 12 15 20 19 16 1995 67 50 53 58 57 1996 15 19 15 14 16 1996 65 56 58 67 62 1997 13 19 24 21 19 1997 67 61 49 58 59 1998 26 17 1998 48 58 44. Share of managers approving the 45. Share of managers not approving the government economic policy of the previous government economic policy of the previous 3-4 months, industry (% of respondents) 3-4 months, industry (% of respondents) 44. Доля руководителей, одобряющих 45. Доля руководителей, не одобряющих экономическую политику правительства за экономическую политику правительства последние 3-4 месяца, промышленность за последние 3-4 месяца, (%) промышленность (%) 1992 30 29 24 – 1992 39 49 44 – 1993 13 19 10 13 14 1993 48 40 55 44 47 1994 6 2 5 2 4 1994 61 61 63 73 65 1995 3 6 2 4 4 1995 68 60 63 65 64 1996 2 7 3 1 3 1996 74 63 63 75 69 1997 1 2 4 6 3 1997 75 75 62 66 69 1998 6 2 1998 69 68 80 The Russian Economic Barometer, Vol VII, N 2, 1998

Year I Q II Q III Q IV Q Annual Year I Q II Q III Q IV Q Annual 47. Time remaining until the end of crisis, 48. Limits to production: insufficient managers' estimates, industry (years) demand, present situation, industry (share of enterprises, %) 47. Время, оставшееся до конца 48. Ограничения производства: экономического кризиса, оценка недостаток спроса, текущая ситуация, руководителей предприятий, промышленность (доля предприятий, %) промышленность (лет) 1991 1991 4 1992 6.2 5.8 5.9 – 1992 36 58 63 48 51 1993 5.8 5.4 6.5 6.1 6.0 1993 43 38 34 50 41 1994 5.9 6.5 6.1 6.8 6.3 1994 53 48 49 42 48 1995 8.2 6.6 6.6 6.8 7.1 1995 43 43 48 53 47 1996 5.9 6.3 7.2 7.5 6.7 1996 57 67 51 59 58 1997 7.5 8.2 7.8 7.6 7.8 1997 54 60 54 50 54 1998 7.3 7.1 1998 54 49. Limits to production: shortage of raw 50. Limits to production: shortage of materials and semi-finished products, present financial resources, present situation, situation, industry (share of enterprises, %) industry (share of enterprises, %) 49. Ограничения производства: нехватка 50. Ограничения производства: нехватка сырья, материалов, полуфабрикатов, финасовых ресурсов, текущая ситуация, текущая ситуация, промышленность (доля промышленность (доля предприятий, %) предприятий, %) 1991 82 1991 18 1992 63 43 39 40 46 1992 29 46 50 56 45 1993 33 27 19 14 23 1993 56 61 64 65 62 1994 13 19 20 25 19 1994 69 66 57 62 64 1995 24 21 25 19 22 1995 63 65 59 68 64 1996 25 23 18 22 22 1996 66 78 68 69 70 1997 25 21 24 27 24 1997 70 67 68 72 69 1998 24 1998 70 51. Limits to production: shortage of labour, 52. Limits to production: shortage of present situation, industry (share of equipment, present situation, industry (share enterprises, %) of enterprises, %) 51. Ограничения производства: нехватка 52. Ограничения производства: нехватка рабочей силы, текущая ситуация, оборудования, помещений, текущая промышленность (доля предприятий, %) ситуация, промышленность (доля предприятий, %) 1991 28 1991 1992 10 8 6 6 8 1992 16 5 2 2 6 1993 5 9 7 3 6 1993 6 7 7 0 5 1994 4 7 5 3 5 1994 3 0 2 4 2 1995 4 6 5 2 4 1995 4 3 3 2 3 1996 0 2 2 0 1 1996 0 6 3 2 3 1997 2 2 3 0 2 1997 3 3 3 5 4 1998 2 1998 3 Survey Statistics 81

Year I Q II Q III Q IV Q Annual Year I Q II Q III Q IV Q Annual 53. Limits to investments: shortage of financial 54. Limits to investments: high prices of resources, present situation, industry (share of equipment and construction, present enterprises, %) situation, industry (share of enterprises, %) 53. Ограничения капитальных вложений: 54. Ограничения капитальных вложений: нехватка финансовых ресурсов, текущая высокие цены на оборудование и ситуация, промышленность (доля строительство, текущая ситуация, предприятий, %) промышленность (доля предприятий, %) 1992 – 66 72 68 – 1992 – 73 77 68 – 1993 70 72 77 76 74 1993 67 71 69 69 69 1994 54 61 70 66 63 1994 58 55 54 62 57 1995 68 63 68 75 69 1995 63 64 60 50 59 1996 70 72 67 75 71 1996 50 52 48 49 50 1997 72 74 75 71 73 1997 48 50 51 50 50 1998 74 1998 46 55. Limits to investments: high cost of capital, 56. Limits to investments: large present situation, industry (share of indebtedness, present situation, industry enterprises, %) (share of enterprises, %) 55. Ограничения капитальных вложений: 56. Ограничения капитальных вложений: высокий банковский процент, текущая большая задолженность, текущая ситуация, промышленность (доля ситуация, промышленность (доля предприятий, %) предприятий, %) 1992 – 26 17 16 – 1992 – 18 13 18 – 1993 18 30 39 40 32 1993 21 19 22 25 22 1994 44 41 33 37 39 1994 29 36 29 29 31 1995 31 30 32 32 31 1995 36 35 35 40 36 1996 29 26 30 27 28 1996 36 38 42 32 37 1997 28 22 17 19 22 1997 40 40 42 39 40 1998 22 1998 47 57. Limits to investments: excessive 58. Limits to investments: insufficient production capacities, present situation, profitability of investment projects, present industry (share of enterprises, %) situation, industry (share of enterprises, %) 57. Ограничения капитальных вложений: 58. Ограничения капитальных вложений: избыток производственных мощностей, недостаточная прибыльность текущая ситуация, промышленность (доля инвестиционных проектов, текущая предприятий, %) ситуация, промышленность (доля предприятий, %) 1992 – 4 6 5 – 1992 1993 4 5 11 6 6 1993 – – 4 6 – 1994 9 12 14 11 12 1994 7 8 7 8 8 1995 11 15 14 17 14 1995 7 7 7 4 6 1996 14 15 18 18 16 1996 6 6 7 5 6 1997 20 20 19 21 20 1997 8 8 6 6 7 1998 19 1998 4 82 The Russian Economic Barometer, Vol VII, N 2, 1998

Year I Q II Q III Q IV Q Annual Year I Q II Q III Q IV Q Annual 61. Percentage of enterprises with productive 62. Percentage of enterprises with capacities redundant against demand productive capacities insufficient against anticipated in 12 months (industry) demand anticipated in 12 months (industry) 61. Доля предприятий с избыточными 62. Доля предприятий с недостаточными производственными мощностями производственными мощностями относительно ожидаемого через 12 относительно ожидаемого через 12 месяцев спроса (%, промышленность) месяцев спроса (%, промышленность) 1993 – – 37 37 – 1993 – – 23 14 – 1994 41 51 43 45 45 1994 15 9 11 9 11 1995 49 51 52 57 52 1995 7 8 9 8 8 1996 56 56 65 60 59 1996 8 8 7 8 8 1997 63 59 58 57 59 1997 5 8 8 9 8 1998 60 1998 3 63. Percentage of enterprises with manpower 64. Percentage of enterprises with redundant against demand anticipated in 12 manpower insufficient against demand months (industry) anticipated in 12 months (industry) 63. Доля предприятий с избыточной 64. Доля предприятий с недостаточной укомплектованностью рабочей силой укомплектованностью рабочей силой относительно ожидаемого через 12 относительно ожидаемого через 12 месяцев спроса (%, промышленность) месяцев спроса (%, промышленность) 1993 – – 25 22 – 1993 – – 24 21 – 1994 26 34 26 26 28 1994 19 18 25 20 20 1995 24 27 22 35 27 1995 24 18 21 13 19 1996 37 35 39 38 37 1996 12 12 11 10 11 1997 39 39 34 38 38 1997 10 9 14 8 10 1998 33 1998 10 65. Percentage of loss-making enterprises in 66. Percentage of enterprises likely to go the previous half-year (industry) bankrupt in the coming 1 to 2 years (industry) 65. Доля предприятий убыточных за 66. Доля предприятий, для которых предшествующие полгода (%, угроза обанкротиться в ближайшие 1-2 промышленность) года выглядит реальной (%, промышленность) 1992 – – – – – 1992 – – 27 24 – 1993 – – – – – 1993 14 21 27 22 21 1994 11 17 25 23 19 1994 27 30 33 32 30 1995 27 21 16 21 21 1995 30 28 25 27 28 1996 27 32 38 38 34 1996 37 36 39 45 39 1997 39 44 45 33 40 1997 38 35 37 29 35 1998 37 41 1998 36 43 Survey Statistics 83

67. Job creation rate, industry, actual 68. Job destruction rate, industry, actual (6-month spans, %) (6-month spans, %) 67. Коэффициент создания рабочих мест, 68. Коэффициент ликвидации рабочих промышленность, фактические изменения мест, промышленность, фактические за 6 месяцев (%) изменения за 6 месяцев (%) 1993 0.5 0.9 1.2 0.9 0.9 1993 6.7 5.5 4.9 5.2 5.6 1994 0.5 0.3 0.4 0.9 0.5 1994 7.6 9.3 8.8 6.7 8.1 1995 1.1 1.4 1.2 0.7 1.1 1995 6.1 5.7 4.2 4.3 5.1 1996 0.4 0.8 0.8 0.6 0.6 1996 4.9 5.0 5.2 5.3 5.1 1997 0.7 1.0 1.5 0.9 1.0 1997 5.8 3.7 3.7 3.7 4.2 1998 0.4 1998 4.0 69. Job creation rate, industry, anticipated 70. Job destruction rate, industry, (6-month spans, %) anticipated (6-month spans, %) 69. Коэффициент создания рабочих мест, 70. Коэффициент ликвидации рабочих промышленность, ожидаемые изменения за мест, промышленность, ожидаемые 6 месяцев (%) изменения за 6 месяцев (%) 1993 – – 0.7 0.9 – 1993 – – 4.6 4.7 – 1994 1.9 0.7 0.7 0.3 0.9 1994 4.4 5.9 8.1 9.5 7.0 1995 0.8 1.0 1.3 1.0 1.0 1995 7.4 6.2 3.6 5.0 5.6 1996 0.6 0.9 0.5 0.5 0.6 1996 4.9 3.8 4.8 4.6 4.5 1997 0.5 0.6 0.8 0.5 0.6 1997 5.7 5.2 3.8 4.0 4.7 1998 0.9 0.8 0.6 1998 3.8 2.6 3.7 71. Portion of unprofitable production in the 72. Share of enterprises producing total output, industry, (%) unprofitable output, industry, (%) 71. Доля убыточной продукции в выпуске, 72. Доля предприятий, выпускающих промышленность, (%) убыточную продукцию, промышленность, (%) 1994 – – 10 9 – 1994 – – 61 60 – 1995 10 13 9 10 10 1995 63 55 64 62 61 1996 11 14 14 13 13 1996 71 74 72 74 73 1997 15 15 15 14 15 1997 70 78 74 78 75 1998 16 1998 75 73. Proportion of costs recovered in selling 74. Loss ratio: portion of losses from prices for unprofitable output, industry (%) unprofitable output in total costs, industry (%) 73. Степень окупаемости убыточной 74. Доля убытков от убыточной продукции, промышленность, (%) продукции в общих издержках, промышленность, (%) 1995 – – – 74 – 1995 – – – 2,6 – 1996 75 75 73 75 75 1996 2,8 3,5 3,8 3,3 3,4 1997 72 73 76 74 74 1997 4,2 4 3,6 3,6 3,8 1998 74 1998 4,2 84 The Russian Economic Barometer, Vol VII, N 2, 1998 101. Limits to production: insufficient demand, 102. Limits to production: shortage of raw present situation, agriculture (share of material and semi–finished products, present enterprises, %) situation, agriculture (share of enterprises, %) 101. Ограничения производства: 102. Ограничения производства: нехватка недостаток спроса, текущая ситуация, сырья, материалов, полуфабрикатов, сельское хозяйство (доля предприятий, %) текущая ситуация, сельское хозяйство (доля предприятий, %) 1992 11 18 24 24 19 1992 36 22 18 12 22 1993 16 28 38 29 28 1993 29 19 16 9 18 1994 34 47 49 26 39 1994 13 3 6 12 8 1995 33 33 37 37 35 1995 13 3 10 14 10 1996 38 33 46 43 40 1996 10 7 2 4 6 1997 25 32 37 33 32 1997 5 6 0 2 3 1998 33 1998 2 103. Limits to production: shortage of financial 104. Limits to production: shortage of resources, present situation, agriculture (share labour, present situation, agriculture (share of enterprises, %) of enterprises, %) 103. Ограничения производства нехватка 104. Ограничения производства: нехватка финасовых ресурсов: , текущая ситуация, рабочей силы, текущая ситуация, сельское хозяйство (доля предприятий, %) сельское хозяйство (доля предприятий, %) 1992 61 68 45 61 59 1992 11 6 8 6 8 1993 73 68 68 74 71 1993 4 8 12 5 7 1994 72 80 68 77 74 1994 2 3 2 0 2 1995 79 64 67 72 70 1995 8 3 4 2 4 1996 84 74 71 74 76 1996 0 2 0 0 0 1997 75 76 73 72 74 1997 0 0 0 4 1 1998 69 1998 3 105. Limits to production: shortage of equipment, present situation, agriculture (share of enterprises, %) 105. Ограничения производства: нехватка оборудования, помещений, текущая ситуация, сельское хозяйство (доля предприятий, %) 1992 11 10 11 12 11 1993 4 9 16 20 12 1994 11 8 10 7 9 1995 10 2 4 2 4 1996 0 7 2 6 4 1997 8 4 10 9 8 1998 7 Survey Statistics 85 INIOR-HSE INDEXES These series were built by results of surveys of intermediary and trading firms conducted by the Institute for Research into Organised Markets and Higher School of Economics (Program Director — A. Yakovlev). The data is revised and corrected.

Year Jan. Feb. Mar. Apr. May June July Aug. Sept Oct. Nov. Dec. Annual 81. Business position, wholesale trade, actual (balance of positive and negative changes over 1–month spans, %) 81. Общее состояние фирм, оптовая торговля, фактические изменения за 1 месяц (баланс числа положительных и отрицательных оценок, %) 1992 –39 7 18 –13 –21 –17 2 25 14 26 38 22 5 1993 –2 10 11 17 32 18 9 40 31 26 38 43 23 1994 –16 12 3 –4 12 19 21 41 42 22 30 22 17 1995 0 17 16 19 12 23 26 6 32 28 20 14 18 1996 -10 15 14 15 -1 -5 18 8 33 14 14 25 12 1997 -11 12 23 20 3 14 14 14 31 21 8 17 14 1998 -18 15 -7 14 -14 82. Sales, wholesale trade, actual (balance of positive and negative changes over 1–month spans, %) 82. Торговый оборот, оптовая торговля, фактические изменения за 1 месяц (баланс числа положительных и отрицательных оценок, %) 1992 –42 6 20 –6 –28 –18 –13 16 16 31 21 14 1 1993 5 15 13 15 21 10 2 31 30 20 40 54 21 1994 –30 10 5 1 13 17 18 35 47 31 34 28 17 1995 –9 25 22 17 17 28 19 7 27 37 11 15 18 1996 -9 19 12 14 -6 -7 12 8 32 17 15 24 11 1997 -15 14 24 20 -3 12 11 15 29 21 9 14 13 1998 -31 17 -6 12 -14 83. Volume of stocks, wholesale trade, actual (balance of positive and negative changes over 1–month spans, %) 83. Товарные запасы, оптовая торговля, фактические изменения за 1 месяц (баланс числа положительных и отрицательных оценок, %) 1993 19 24 1994 6 11 7 1 9 –3 15 25 18 13 10 16 11 1995 13 8 18 9 16 13 22 13 9 28 13 6 14 1996 12 6 7 10 11 4 10 2 9 1 -1 9 7 1997 18 15 13 9 6 9 6 6 16 11 7 0 10 1998 8 2 0 5 -1 86 The Russian Economic Barometer, Vol VII, N 2, 1998

84. Selling prices, wholesale trade, actual (balance of positive and negative changes over 1– month spans, %) 84. Отпускные цены, оптовая торговля, фактические изменения за 1 месяц (баланс числа положительных и отрицательных оценок, %) 1993 41 42 1994 52 25 1 –14 6 17 18 36 36 36 47 35 25 1995 49 72 71 58 35 29 41 27 17 12 9 7 36 1996 8 -9 -2 2 7 3 -5 4 7 6 -2 -8 1 1997 6 -8 -5 -6 -6 -4 -6 -3 8 1 0 0 -2 1998 -4 -15 -23 -23 -29 85. Selling prices, wholesale trade, anticipated (balance of positive and negative changes over 3–month spans, %) 85. Отпускные цены, оптовая торговля, ожидаемые изменения за 3 месяц (баланс числа положительных и отрицательных оценок, %) 1993 60 61 1994 52 50 44 33 28 51 50 53 52 52 49 62 48 1995 55 74 75 71 67 60 64 48 45 45 45 47 58 1996 51 26 25 22 19 21 16 30 24 10 15 14 23 1997 16 13 18 1 8 8 10 5 7 9 10 13 10 1998 6 -4 -7 -8 -10 86. Business position, wholesale trade, anticipated (balance of positive and negative changes over 3–month spans, %) 86. Общее состояние, оптовая торговля, ожидаемые изменения за 3 месяц (баланс числа положительных и отрицательных оценок, %) 1993 38 21 1994 20 31 22 4 15 22 34 37 44 36 34 36 28 1995 30 46 30 15 11 30 43 38 39 37 23 16 30 1996 35 41 37 25 13 26 32 41 31 26 29 10 29 1997 35 36 37 43 19 31 48 55 36 29 23 24 35 1998 38 40 41 37 -1 87. Sales, wholesale trade, anticipated (balance of positive and negative changes over 3– month spans, %) 87. Торговый оборот, оптовая торговля, ожидаемые изменения за 3 месяц (баланс числа положительных и отрицательных оценок, %) 1993 45 46 1994 64 57 41 41 40 47 40 52 65 56 50 51 50 1995 58 49 50 32 35 33 65 57 60 56 38 35 47 1996 56 51 43 32 23 27 44 48 41 31 32 19 37 1997 47 53 40 35 19 30 51 60 44 38 34 29 40 1998 37 56 39 33 8

Chronological List of "The Russian Economic Barometer" Articles by Subject Index to Volumes I-VI

Industry — Economic Crisis in Russia: Survey of Producers' Opinions. Vol I, N1, 1992. — Privatisation in Russia: First Results and Prospects (Surveys of Producers' and Bankers' Opinions). Vol. I, N4, 1992. — 1992: Russian Enterprises under New Economic Environment. S.Aukutsionek. Vol. II, N1, 1993. — Is the Bulk of the Russian Enterprises Likely to Go Bankrupt? E.Belyanova, S.Aukutsionek. Vol. II, N1, 1993. —Privatization: First Results. E.Gurvich, M.Levin, S.Movshovich, R. Sheinin. Vol. II, N1, 1993. — Crisis in the Manufacturing Industry: Investment Goods Sector vs. Consumer Goods Sector. E.Belyanova. Vol. II, N2, 1993. — Why Does Production Fall? S.Aukutsionek. Vol.II, N2, 1993. — How Do Managers of Industrial Enterprises Assess the Policy of Reforms? S.Aukutsionek. Vol. II, N2, 1993. — `Price Liberalization and Enterprises' Behavior. S.Aukutsionek. Vol.II, N3, 1993. — Innovations in Russian Industry. S.Aukutsionek, M.Gracheva. Vol.II, N3, 1993. — Who Is Afraid of Going Bankrupt? S.Aukutsionek, V.Zhukov. Vol.II, N4, 1993. — Investment Behavior in 1992-93. S.Aukutsionek. Vol II, N4, 1993. — Banks' Involvement in the Enterprises' Privatization: Intentions and Results. E.Belyanova. Vol. II, N4, 1993. — Crisis in Russian Industry. S.Aukutsionek. Vol.III, N1, 1994. — Enterprises under Decentralized Banking System. S.Aukutsionek, E.Belyanova. Vol. III, N1,1994. — Labor Market in 1993. R.Kapeliushnikov, S.Aukutsionek. Vol.III, N1, 1994. — Industrial and Agricultural Enterprises. S.Aukutsionek. Vol. III, N2, 1994. — Innovations in Russian Industry. M.Gracheva, S.Aukutsionek. Vol. III., N2, 1994. — Barter in Russian Industry. S.Aukutsionek. Vol.III, N3, 1994. Chronological List of Articles 103 — How Long Will the Economic Crisis Last? E.Belyanova. Vol. III, N4, 1994. — Economic Motivation of Russian Enterprises. S.Aukutsionek. Vol. III, N4, 1994. — Russian Conversion at the Enterprise Level. K.Gonchar. Vol. III, N4, 1994. — Budget Constraints in Economy under Transition. S.Aukutsionek, E.Belyanova. Vol. III, N4, 1994. — Surveys of Industrial Enterprises in 1994. S.Aukutsionek. Vol.IV, N1, 1995. — The Market Reform and Transitional Crisis. S.Aukutsionek. Vol.IV, N1, 1995. — Small Business in Transition Economy. T.Dolgopyatova. Vol.IV, N2, 1995. — Labor Market in 1994. R.Kapeliushnikov, S.Aukutsionek. Vol. IV, N2, 1995. — Industrial Enterprises and the Economic Policy. S.Aukutsionek. Vol. IV, N3, 1995. — Propensity to Strike in Russia: Why Does It Remain So Low? V.Gimpelson, G.Monusova. Vol. IV, N3, 1995. — Wasteful Production in the Russian Industry. S.Aukutsionek. Vol. IV, N4, 1995. — Small Entrepreneurship and the State. A.Avilova, A.Chepurenko, V.Pripisnov. Vol. IV, N4, 1995. — Surveys of Industrial Enterprises in 1995: Results and Forecasts. S.Aukutsionek. Vol. V, N1, 1996. — Labour Hoarding in Russian Industry. S.Aukutsionek, R.Kapeliushnikov. Vol.V, N2, 1996. — Why Do Respondents Answer Us? S.Aukutsionek, S.Tsoukhlo, N. Zhukova. Vol. V, N2, 1996. — Forecasting in Russian Industry. S.Aukutsionek. Vol.V, N3, 1996. — Ownership Effects in a Transition Economy. S.Aukutsionek, R.Kapeliushnikov. Vol.V, N3, 1996. — Bank Loans to Russian Industry. S.Aukutsionek. Vol. V, N4, 1996. — Transition Economy and Ownership Effects. S.Aukutsionek, R.Kapeliushnikov. Vol. V, N4, 1996. — Surveys of Industrial Enterprises in 1996: Results and Forecasts. S.Aukutsionek. Vol.VI, N1, 1997. — Survival Strategies: Russian vs. Dutch Manager Surveys. E.Belyanova. Vol. VI, N1, 1997. — Job and Labour Turnover in the Russian Industry. R.Kapeliushnikov. Vol. VI, N1, 1997. 104 The Russian Economic Barometer, Vol VII, N 2, 1998 — Russian Enterprises and External Economic Information. P.Kochanov. Vol. VI, N2, 1997. — What Types of Enterprises Cut Their Output Prices. A.Batyaeva.Vol. VI, N2, 1997. — Job-Gainers and Job-Losers: Some Comparisons. R.Kapeliushnikov. Vol.VI, N2, 1997. — Profit Motive in Transition Economy. S.Aukutsionek. Vol.VI, N2, 1997. — Privatisation of Enterprises and Units in CIS Countries. V.Belyanov. Vol. VI, N3, 1997. — Investments in Russian Industry. S.Aukutsionek, A.Batyaeva. Vol.VI, N4, 1997. — Surveys of industrial enterprises in 1997: results and forecasts. S.Aukutsionek. Vol.VII, N1, 1998. — Dominant shareholders and performance of industrial enterprises. S.Aukutsionek, R.Kapeliushnikov, V.Zhukov. Vol.VII, N1, 1998. Banking — Russian Banks are Gaining Momentum: Survey of Commercial Bankers' Opinions. Vol.I, N2, 1992. — Privatisation in Russia: First Results and Prospects (Surveys of Producers' and Bankers' Opinions). Vol. I, N4, 1992. — Are Foreign Banks Welcome to the Russian Market. E.Belyanova. Vol. II, N1, 1993. — Commercial Banks in the Voucher Market. E.Belyanova. Vol. II, N2, 1993. — Commercial Banks: Recent Trends. E.Belyanova. Vol. II, N3, 1993. — Banks' Involvement In the Enterprises' Privatization: Intentions and Results. E.Belyanova. Vol. II, N4, 1993. — Enterprises under Decentralized Banking System. S.Aukutsionek, E.Belyanova. Vol. III, N1,1994. — Banks and Policy. E.Belyanova. Vol. III, N2, 1994. — Banking Sector in Transition. E.Belyanova. Vol. III, N3, 1994. — Likelihood of Bank Crisis in Russia. E.Belyanova. Vol. IV, N2, 1995. — Commercial Banking in Russia: Evidences from Official Statistics and Economic Surveys. E.Belyanova. Vol. IV, N4, 1995. — Bank's Objectives: Evidence from Surveys. S.Aukutsionek, E.Belyanova. Vol. V, N1, 1996. — Bank Loans to Russian Industry. S.Aukutsionek. Vol. V, N4, 1996. Chronological List of Articles 105 — Forecasting Practice in Banking Sector. S.Aukutsionek.Vol. VI, N2, 1997. Agriculture, Construction, Trade — Agriculture in 1992: Estimates and Prospects. Vol. I, N3, 1992. — State vs. Non-State Enterprises: Estimates, Forecasts and Comparisons. S.Aukutsionek. Vol. II, N2, 1993. — Construction: Situation Is Not Too Pessimistic. G.Ostapkovich. Vol. II, N3, 1993. — Industrial and Agricultural Enterprises. S.Aukutsionek. Vol. III, N2, 1994. — Wholesale Trade in Moscow. A.Yakovlev. Vol. III, N3, 1994. — Foreign Companies in Russia. M.Alexandrova. Vol. III, N3, 1994. — Competition on the Wholesale Market is Sharpening. A.Yakovlev, D.Toushounov. Vol. IV, N1, 1995. — Developments in Foreign Exchange Market in Russia. V.Bessonov. Vol. IV, N1, 1995. — The Emergence of Equity Market in Russia. P. Tatyanin. Vol. IV, N3, 1995. — Agricultural Enterprises: Present Conditions and Forecasts. A.Matveyev. Vol. V, N2, 1996. — Cash Transactions in Wholesale Trade. A.Yakovlev. Vol. V, N2, 1996. — Government Securities Market: from Start to Date in Brief. D.Malievski. Vol. V, N3, 1996. — Agricultural Enterprises: Shifts in Behavior in Response to Reforms. A.Matveev. Vol.VI, N1, 1997. — Industrial Barter in Russia. S.Aukutsionek. Vol. VI, N3, 1997. — Black Cash Turnover and Behavior of Wholesale Trade Enterprises. S.Aukutsionek. Vol. VI, N4, 1997. Laws, Commentaries — The Main Provisions of the 1992 Privatization Program for State and Municipal Enterprises. Vol. I, N1, 1992. — Financial Markets under the New Legal Framework. Vol. I, N2, 1992. — Pension Reform in Russia. Vol.I, N3, 1992 — The Legal Base of Privatisation in the Russian Federation. Vol. I, N4, 1992. — Bankruptcy Law in the Russian Federation: Will Hard Budget Constraints Become Reality? E.Zhuravskaya. Vol. II, N1, 1993. — Evolution of Legislative Framework for Privatization and its Enforcement in Practice. E.Zhuravskaya. Vol. II, N2, 1993. 106 The Russian Economic Barometer, Vol VII, N 2, 1998 — Participation of Russian Commercial Banks in State Investment Programs E.Belyanova. Vol. II, N3, 1993. — Privatization in Russia: Recent Experience (May-October 1993) A.Radygin, E. Zhuravskaya. Vol. II, N4, 1993. — Banks and Privatization: Legal Framework. Vol. II, N4, 1993. — Banks and Privatization: Legal Framework. (Continuation). Vol. III, N1, 1994. — State Budget Process Needs Reforming. A.Naumenkov. Vol. III, N2, 1994. — Shaping the Legal Base for Privatization in Russia.V.Belyanov. Vol. III, N3, 1994. — On the History of Shaping of the Legal Base for Privatiization in the Russian Federation. V.Belyanov. Vol. IV, N1, 1995. — Russia's Model of Fiscal Federalism. O.Bogatcheva. Vol.V, N1, 1996. — The Law "On Production Sharing Agreements": Hindrances in the Way to Enactment. M.Subbotin. Vol. V, N3, 1996. Other — Budget Constraints in Economy under Transition. S.Aukutsionek, E.Belyanova. Vol. III, N4, 1994. — The Market Reform and Transitional Crisis. S.Aukutsionek. Vol. IV, N1, 1995. — Development of the Futures Foreign Exchange Market in Russia. A.Yakovlev. Vol. IV, N2, 1995. — Why Do Respondents Answer Us? S.Aukutsionek, S.Tsoukhlo, N.Zhukova. Vol. V, N2, 1996. — Economic Trends in CIS Countries: 1991-1996. V.Belyanov. Vol.VI, N1, 1997. — Expectations and Calibration of Business Forecasts: Preliminary Results. A.Belianin. Vol.VI, N3, 1997. — Small Business and Foreign Capital in Contemporary Russia. V.Pripisnov. Vol.VI, N4, 1997. — Investment Priorities in Russia's Economy.Y.V. Kurenkov . Vol.VI, N4, 1997.

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------ ORDER FORM I/we order Russian Economic Barometer Quarterly Bulletin on Business Tendency Surveys Vol. IV 1995 1 2 3 4 Vol. V 1996 1 2 3 4 Vol. VI 1997 1 2 3 4 Vol. VII 1998 1 2 3 4 Vol. VIII 1999 1 2 3 4 The price is £8 for each issue (+ postage extra: £2 for Europe; £4 for non-European countries). Subscription for 4 issues is £30 (+ postage extra: £8 for Europe; £16 for non-European countries) Company ______Address ______Telephone ______Fax ______Date ______Signature ______I transferred the equivalent of £...... to: Mr. T.Buck National Westminster Bank, University of Nottingham Branch Code of the Branch 60 15 49 A/C Number 43007082 ------ ATTENTION! Those interested in any information on subscription to «THE RUSSIAN ECONOMIC BAROMETER» please contact Inessa Bashirova — Institute of World Economy and International Relations, 23 Profsoyusnaya St., Moscow, Russia. Fax (7 095) 310 7027, 120 8328. Tel. (7 095) 120 8328. E-mail: [email protected].

ATTENTION Those interested in any information on subscription to "THE RUSSIAN ECONOMIC BAROMETER" please contact Inessa Bashirova — Institute of World Economy and International Relations, 23 Profsoyuznaya St., GSP-7, Moscow, Russia; Fax (7-095) 310 7027, 120 8328; Tel. (7-095) 120 8328; E-mail: [email protected]

«The Russian Economic Barometer» is an independent bulletin monitoring transition to the market in Russia «REB» presents unique information on business conditions based on the results of monthly panel surveys of producers and bankers. «REB»’s respondents are executive managers of 500 industrial enterprises, 300 agricultural ones and 150 commercial banks from practically all the regions of Russia. «REB» studies microlevel response to macroeconomic policy, basic legislative changes, property rights reform.