:iA HISTORICAL review program
MEMORANDUM FOR: Mr. Milton Kovner EUR/SOV
Department of State
Soviet Hard Currency Trade
4 and Prospects5
1. Recently published Soviet statistics reveal that theard currency trade deficit1 million4 rather than theillion surplus projected last -winter. The basic balance nonetheless remained in surplus.
2. Soviet- exports generally turned out The value of Soviet hard6 billion. The averageexports almost doubledut theseveral key exports
1 billion decline in imports of grain and other food, the total- value of hard currency imports jumped5 billion. This increase was caused, in part, by the higher prices Moscow was torced to pay for many products and, in part, by the ability of the Soviet Union to maintain or even increase the import volume of many higher priced products (see Table).
oscow easily covered4 trade deficit by selling gold and drawing on Western credits. 4 the USSR's basiche balance of current and long-term capital transactionswas in
USSR: Hard Currency Imports
rolled ferrous metals
surplus by more 0 million. Higher payments medium- and long-term loansrop in gold sales reduced the receipts of hard currency from non-trade transactions.
USSR: Hard Currency Balance
I". Excludes short term capital and medium-term Eurocurrency .tran sactions.
Moscow willuch larger trade deficit Soviet exports to major Western trading partners are runningelow last year's averages, and sluggish Western import demand should limit any upturn in sales during the remainder of the year. Soviet imports, in contrast, will climb substantiall again Statistics of several major Soviet trading partners indicate that Soviet imports arebove last year's average as Moscow maintains the high import level reached during the second half
Imports of Western machinery and equipment will account for much'of the rise, as Western firms make deliveryortion of5 billion in equipment ordered by Moscow. Heavy grain imports will also boost imports substantially this year. Soviet grain imports, depending upon actual delivery dates, could
4 billion0 million more than in
7. Moscow should be able to finance the5 deficit easily, evun if it runs toillion or more. Drawings on medium- and long-term Western creditn should5 billionith net credits rising2 billion. The Soviets have twice gone to the Eurodollar market since otal0 million in medium- and long-term loans. The USSR also continues to increase its domestic production ofons5nd it has anons in reserve. At tho current market prices5 per ounce, sales ofons would net the Soviet mo're thanillion.
Office of Economic ResearchOriginal document.