MOSCOW, FEB. 27 -- The Russian government announced today that it will push ahead with its program of economic shock therapy by lifting most remaining price controls by the end of March and easing restrictions on foreign trade operations.
The steps, outlined after a cabinet meeting chaired by President Boris Yeltsin, represented the government's approval of an agreement reached Saturday with officials of the International Monetary Fund that is designed to clear the way for Russian membership. IMF approval of an economic reform program is essential if Russia is to secure the loans it needs to stabilize the value of the ruble and make the transition to a market economy.
"We hope this document will make a good impression on the international economic community," government adviser Konstantin Kagalovski said, adding that the reform program will be sent to the IMF "in the nearest future."
The IMF is expected to approve Russian membership at its April meeting, and IMF assistance would probably be available by June, according to IMF officials.
Moscow's willingness to accept most IMF recommendations on reforming the economy along free-market lines reflects the relief felt among Russian officials at the relatively muted public response to an initial easing of price controls last month. While both reformist and reactionary politicians have attacked the government's economic policies, a much predicted explosion of social disorder has failed to materialize.
A recent opinion poll in the newspaper Izvestia suggested that public confidence in the government's handling of the economy is increasing following the initial shock caused by price rises averaging 300 percent. The number of people expressing dissatisfaction with their lives dropped to 68 percent, from 81 percent in January, while the number of those who said they were satisfied has doubled.
Government officials said price controls on staple foodstuffs such as bread, milk, and some types of meat will be lifted by the end of March. Energy prices here, which are now only a fraction of world norms, will be allowed to rise to around 70 percent of world prices by mid-April. The price of medicines, baby food and housing will remain under government control.
Moscow Mayor Gavril Popov cautioned that the latest price-reform move could produce social disturbances by the middle of April, when food stocks hoarded by the population run out. The heightened economic distress, he said, could then lead to a political crisis.
Kagalovsky said he hopes IMF membership will pave the way for Russia to receive funding of about $6 billion to stabilize the ruble and introduce a realistic exchange rate. The ruble, which fell to record lows of about 150 to the dollar over the past month, has crept up against Western currencies in recent days. But most analysts say the relative strength of the Russian currency is related more to an artificial shortage of paper banknotes than to long-term economic trends.
In a separate move designed to liberalize foreign trade, the government said it will suspend the present quota and licensing system for goods exported from Russia. The system has disrupted economic ties among the former Soviet republics, forcing factories in one republic to lay off workers because they can no longer rely on supplies from another republic.
Yeltsin, meanwhile, directed Vice President Alexander Rutskoi to push ahead with the transfer of state-owned land to private farmers. Rutskoi, one of the chief critics of Yeltsin's economic reform plans, was given overall responsibility for Russian agriculture in what was widely seen as an attempt to silence him.
Yeltsin said that Rutskoi has "personal responsibility for carrying out the instructions of the president of Russia" in the area of farm reform. It also instructed him to work out ways to convert defense factories to the production of farm machinery and the processing of food.