Shock Therapy

Question 1

What was the loans for shares program?

Answer 1

A scheme to fund the government (and absorb excess liquidity) by securing loans from Russian banks using government-owned companies as collateral. The process was corrupt and resulted in ownership of major companies being consolidated into the hands of the oligarchs. The government defaulted on the loans, and the banks (owned by oligarchs) took the collateral.

Begun in 1995, it also helped fund Yeltsin’s 1996 reelection campaign.