The Soviet Union's Hard-Currency Balance of Payments and Creditworthiness in 1985

This study of Soviet hard-currency balance-of-payments structure and creditworthiness in 1985 is intended to be not a prediction but rather a set of projections of the Soviet Union's financial position in 1985, based on several scenarios resting upon an array of stylized but plausible assumptions. The model highlights the vulnerability of the Soviet hard-currency balance-of-payments to a liquidity squeeze by examining its near-term financial policy variables. The authors first estimate an "initial scenario" for the 1985 hard-currency balance-of-payments, which comes in two variants according to the assumed rate of Soviet GNP growth during the current Five-Year Plan, 1981 through 1985. Next, a list of adverse events of internal and external origin and the effects of each individually on net compressible-import capacity is examined. Finally, the authors examine a series of "worst cases," which combine several of the more serious adverse events at once.