In November 1991, Gaidar was appointed to the position of Deputy Prime Minister and the Minister of Economy and Finance, becoming thus responsible for all economic and financial issues for a country in turmoil. Having examined the latest data on the real situation in the economy, Yegor Gaidar came to a firm conclusion: only decisive action was possible. In January 1992, ignoring political opponents’ protests, the government liberalized prices for industrial and agricultural products. Soon after, decrees on free trade and privatizing state enterprises were adopted. A free market economy emerged on the ruins of the Soviet command economy. The threat of nation-wide hunger was eliminated as the commodity stock grew very quickly. However, this led to double-digit monthly inflation. The government had no other choice but to cut public spending, restrict prices subsidizing from retail, and introduce the value-added tax.
These measures made it possible to stabilize the macroeconomic situation, but triggered political upheaval and mass dissatisfaction among the general population. As a compromise by the presidential team to the opposing Supreme Soviet, Yegor Gaidar resigned from high governmental posts in December 1992. However, it soon became clear that indulging the Supreme Soviet’ s policy meant cancelling all the results of the reforms at once and still not reaching political reconciliation.
In September 1993, Gaidar returned to the government as First Deputy Prime Minister. This was a time of dramatically aggravated political crisis. In these conditions, Yegor Gaidar acted resolutely and
All the burden of responsibility for the country, for rescuing its ruined economy, for the lives and fortunes of millions of people was on my shoulders... The picture that came to light proved the bitter truth: there were no resources that could mitigate the social expenses of launching the new economic management mechanism. Two or three more months of doing nothing, and we would face economic and political catastrophe, the country’ s collapse, and a civil war. This is my strong belief.
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