The paper analyzes Russia's present economic condition and shows how i
t has changed from the 1992-94 period. It shows that all ambitious int
entions to stabilize the economy have failed to some extent due to the
fact that part of revenues, which could be used for social projects,
investment and other needs, ''disappeared'' from the economy. Such a p
erformance contributed to the concentration of money in some sectors o
f the economy and social groups increasing social inequality. Neverthe
less, one more time the Russian government proclaimed a new stage of e
conomic reform in fall. 1994, claiming that more rigorous fiscal and m
onetary policies were necessary to reduce inflation. Budgetary spendin
gs were reduced, however it has not resulted in the targeted slow-down
of inflation. The main result of such policy was a deep fall in domes
tic demand. Budget shortages caused a deep fall in wages of state empl
oyees. Real disposable incomes decreased by 12 percent in January-Sept
ember of 1995. Low domestic demand may contribute to the continue of t
he recession period.