Comparative Economic Studies         Past Issues

Editor's Introduction to the Symposium:

    Since the fall of the Berlin Wall, the International Monetary Fund (IMF) and the World Bank have played a central role in advising and providing financial support to the countries of Central and Eastern Europe and the former Soviet Union.  To analyze the economic changes that have taken place since then, it is important to understand the relationship between these organizations and the countries they advised and supported.  A study of the period of the "ruble zone" in the early 1990s provides a revealing portrait of the problems faced by the countries in the former Soviet Union and the interactions between advisors from the IMF and the leaders in these countries.

    The collapse of the Soviet Union at the end of 1991 raised many questions about the economic relationships between the new countries that formerly made up the Soviet Union.  None of the policy decisions were, perhaps, more important than the monetary policies that would be adopted by the new countries.  A central issue was whether the new countries would retain the ruble as their currency or adopt new currencies.  the Baltic countries quickly made decisions to create their own currencies.  The other twelve countries decided to continue to use the ruble, thus creating a "ruble zone" where the ruble continued to be used as the medium-of-exchange. 

    There is little dispute that the ruble zone did not function well.  Ten of the fifteen successor countries to the Soviet Union experienced hyperinflation.  By the end of 1993 only Tajikistan (and Russia) still used the ruble.

    While there is no dispute about these outcomes, there is considerable disagreement about the IMF's role in advising these countries to continue to use the ruble.  Many observers of this period have argued that the IMF played an important role in advising these countries to retain the ruble.  In August 2001, an IMF working paper (Odling-Smee and Pastor, 2001) was posted on the IMF web site.  In this paper John Odling-Smee, who is the director of the European II Department of the IMF which deals with these countries, and Gonzalo Pastor, who also worked in the European II Department, outline their view of what transpired during this period.  They present not only the economic issues, but also the political interactions that led to these decisions.

    Odling-Smee and Pastor have been kind enough to publish a somewhat shortened version of their working paper as part of this symposium.  (The principal difference is that we asked them to leave out extensive appendices that were part of the original working paper.)  The other contributors to the symposium were working as advisors or government official during this period.  They include Richard Pomfret, Brigitte Granville, Yegor Gaidar and Anders Aslund.

    The willingness of the IMF officials to engage in open academic debates, as they have done in this symposium, provides the public with important insights into the functioning of the IMF and the considerations the institution made when formulating its policy advice.  Comparative Economic Studies is very pleases to be able to provide a forum.

- The Editors