President Mikhail Gorbachev, moving Friday to implement his economic reforms, ordered the devaluation of the ruble, the Soviet Union's currency, by 69 percent in an effort to force the country's industry to become more productive and to begin wringing state subsidies out of the Soviet price system. In another major economic decree, Gorbachev authorized foreign companies to establish wholly owned subsidiaries in the Soviet Union on an equal footing with Soviet enterprises and with the right to reinvest or transfer their earnings abroad.
In a third decree, which also lays the foundation for the major changes ahead, Gorbachev permitted Soviet banks to increase the interest they pay on long-term deposits. The Finance Ministry and the Soviet State Bank immediately raised their maximum rates from 3 percent and 4 percent to 9 percent and 10 percent.
Prime Minister Nikolai Ryzhkov, speaking to a trade union congress, said that more steps would quickly follow as Gorbachev introduces his long-delayed economic reforms, with the aim of building enough momentum to overcome the likely resistance to the changes.
All three measures were included in the reforms approved in outline last week by the Supreme Soviet, the country's legislature, to develop a market economy here in place of the old system of state ownership, central planning and bureaucratic management. Gorbachev signed them before leaving Friday for a visit to Spain.
The ruble's devaluation becomes effective Thursday for all commercial transactions.
Although endorsing step-by-step changes, Ryzhkov again argued against moving too boldly, too fast. He said that the transition could not be accomplished in 500 days, as advocated by radicals, but would require five to eight years of hard work.
He said that price reform, a key element in developing a market economy here, would be undertaken gradually. Although virtually all wholesale prices will be raised, only 40 percent will be allowed to respond to market forces of supply and demand, he said. At the same time, retail prices on basic consumer goods will be maintained next year through state subsidies.
The devaluation of the ruble, which will be worth 56 cents instead of $1.81, is aimed at encouraging Soviet enterprises to export more goods and to discourage imports by making foreign goods more expensive, Ryzhkov said.