First, fuel prices are so high that importers are beginning to reduce demand and are thus pushing prices down. If this happens, Russia's balance of payments will deteriorate and it will have serious problems repaying its foreign debt. In this respect, Russia's position resembles that of Latin America in the early 1980s. But Russia is not prone to volatile governments, hyperinflation, and economic populism. Putin's rule is going to be fairly authoritarian, and debts can be repaid if the country forgoes other expenditures.
Structural reform is the only true solution to Russia's foreign indebtedness problem.
When it must choose between structural reforms and improving the social safety net, the government will definitely pursue the former. This approach need not necessarily lead, however, to dramatic reductions in living standards for lower-income groups if the available social funds are spent in a more rational way and competitive private enterprises become involved, along with governments, in providing social and public services. But improving relations with the West will be decisive in bringing down foreign indebtedness. Currently, relations seem to have improved, raising hopes that the West will restructure Russia's old debts. The former minister of the economy, Yevgeniy Yasin, proposed a more radical position, arguing that Russia will achieve sustained growth only if all Soviet debt is written off and current debt payments are restructured.