An Accidental Illiberal Recovery: Russia, 1999–2005

This is a story of an accidental series of policy decisions with enormous consequences. In September-December 1998, the Central Bank of Russia initiated a concerted effort to accumulate foreign exchange reserves. The simplest and quickest policy instrument was compulsory repatriation of export revenues. The policy has succeeded over the years in its intended objective. Russia’s foreign exchange reserves increased from nearly zero in the late 1998 to over $170 billion by the end of 2005.