Russian Economy General News: #2

Beriev-200 going to be built in USA

Asf wrote:

Beriev-200 going to be built in USA

Where are the sanctions, then they are needed the most? Let them buy russian-build ones

I wish they'd build them in RU, but that isn't going to happen... Ironic that even through all the sanctions, the US needs Russian equipment one way or another!

par far wrote:What does this mean?

http://www.businessinsider.com/russia-saudi-arabia-and-oil-prices-2014-10


What can Russia do here?

Siluanov predicted that Russia’s budget would lack 500 billon rubles (nearly $12.5 billion) if oil prices drop to $87 per barrel and the dollar-ruble exchange rate trades as high as 40 in 2015. In such a scenario, Russia would have to use money from its Reserve Fund, which comprises about $90 billion, he announced at the Oct. 13 session of the State Duma, the lower chamber of the Russian parliament.

sepheronx wrote:If Russia comes out with a GDP growth (even if very small like 0.1%) I am going to laugh.

That said, the article isn't bad, title is just outright stupid.  All this will do is force Russia to change economic policies and look at other methods to the economy rather than just oil and gas.  They may look more at their own population to prop themselves up by offering cheaper gas on domestic market.  What is funny, the doom and gloom seems to be always pointed at Russia.  But even with Sanctions up the ying yang, Iran survived.  They have their issues, but a lot of it is due to poor management and lack of freedom in economy.  Outside of that, they are still producing.

The question is, how will this effect countries like US and Canada?  Canada's main export is pretty much oil and gas, besides US made automobiles.  US Fracking will be in trouble and Saudi Arabia relies on oil and gas sales, especially in keeping their people together.

Russia on the other hand, has their industrial strength to fall back on.  Maybe not the biggest money maker, but at least they do produce cars, tools, heavy industrial equipment, agriculture etc etc etc.  They will just have to find a market for it and I guess they knew something like this would eventually end up happening, since they are looking towards latin america, Africa and Caucuses to sell their products to.

As for having to use reserve funds, they can effectively use their foreign reserve as well, which still stands at over $450B even though CB used a lot of it in order to pay off debt.

I would only believe if they do something concrete

Asf wrote:

I would only believe if they do something concrete

What should they do?

Siluanov said: "There is no need to re-invent the wheel, other countries have tried spending and loose monetary policy and it only offered short term respite.




"We need structural reforms, those who have implemented structural reforms have been the winners."

Austin wrote:

sepheronx wrote:If Russia comes out with a GDP growth (even if very small like 0.1%) I am going to laugh.

That said, the article isn't bad, title is just outright stupid.  All this will do is force Russia to change economic policies and look at other methods to the economy rather than just oil and gas.  They may look more at their own population to prop themselves up by offering cheaper gas on domestic market.  What is funny, the doom and gloom seems to be always pointed at Russia.  But even with Sanctions up the ying yang, Iran survived.  They have their issues, but a lot of it is due to poor management and lack of freedom in economy.  Outside of that, they are still producing.

The question is, how will this effect countries like US and Canada?  Canada's main export is pretty much oil and gas, besides US made automobiles.  US Fracking will be in trouble and Saudi Arabia relies on oil and gas sales, especially in keeping their people together.

Russia on the other hand, has their industrial strength to fall back on.  Maybe not the biggest money maker, but at least they do produce cars, tools, heavy industrial equipment, agriculture etc etc etc.  They will just have to find a market for it and I guess they knew something like this would eventually end up happening, since they are looking towards latin america, Africa and Caucuses to sell their products to.

As for having to use reserve funds, they can effectively use their foreign reserve as well, which still stands at over $450B even though CB used a lot of it in order to pay off debt.

You know I have heard the bolded part before from Russian Government in the many years I have been following them.

When Oil Prices Fall they say we need to get from Oil Dependencies blah blah blah ........When Oil Prices Rise its all gone and forgotten.

The more they change the more things remain the same

I would only believe if they do something concrete else its all BS Talk for Talk Stuff

Defying the dollar Russia & China agree currency swap worth over $20bn



The central banks of China and Russia have signed a 3-year ruble-yuan currency swap deal up to $25 billion, in order to boost trade using national currencies and lessen dependence on the dollar and euro.

On Monday, China’s Central Bank announced the 150 billion yuan (815 billion ruble) currency swap between the Russian ruble and Chinese yuan. In terms of the Chinese currency that is $24.5 billion, and in Russian rubles, $20.1 billion.

"We need to expand the practice of using national currencies in trade. Currently they only account for 7 percent of turnover,” Prime Minister Dmitry Medvedev said at the 18th annual Russian-Chinese Commission, also attended by Chinese Premier Li Keqiang.

The deal is valid for 3 years, and can be extended if both Russia and China agree. The draft currency swap was settled in August, but details on the size of the deal were sketchy.

Using more local currencies will speed up trade between the two countries who are aiming to reach $100 billion by 2015. Trade between Russia and China is already nearly $90 billion and is scheduled to hit $200 billion in the next six years.

Cooperation between Russian and Chinese banks is also on the rise, and China’s Import Export Bank, which is 100% state owned, has pledged to help Russian banks now cut off from Western capital markets, due to the latest round of sanctions.

The Export-Import Bank (Exim) has agreed to establish a credit line equivalent to $2 billion for Russian state bank VTB, and has also signed agreements with VEB (Vnesheconombank), and the Russian Agricultural Bank.

The credit lines can be used to finance imports from China, from agriculture to high tech equipment.

Medvedev and Li signed over 40 other agreements at the meeting, including outlining plans to add another pipeline from Russia to China. Li is in Moscow for a three-day visit.

Defying the dollar Russia & China agree currency swap worth over $20bn

Rosteh signed an agreement with the China Aerospace Corporation
The document is aimed at the development of joint ventures and developments in the field of electronics



Rosteh, China Corporation Aerospace Science and Technology (CASC) signed a strategic cooperation agreement to promote trade, investment and cooperation in the field of high technologies.


The parties will be engaged in joint development and production of electronic components, will cooperate in the field of information technology, communications systems and automation, new materials.

The agreement was signed by CEO Rosteha Chemezov and Chairman of the Board of Directors of CASC Lei Fanpey. The signing ceremony took place during a meeting of heads of governments of Russia and China - Dmitry Medvedev and Li Keqiang.

The agreement allows you to start the preparation and implementation of joint projects in Russia, China and third countries. Rosteha cooperation with CASC will focus on the civilian side.

"Joining forces, competences, scientific potential and production potential of the Russian and Chinese companies provides quality advantages that allow you to implement a successful global joint projects, - said director general Rosteha Chemezov . - Production of competitive high-tech products with Chinese partners will allow enterprises to increase Rosteha its share of the world market, where they are already present, and come out on the other. Agreement with CASC opens new areas of economic cooperation and allows it in new forms. "

Among the possible areas of cooperation - joint development and production of electronic components, information technology, communications and automation (with "Roselektronika" and the Russian Corporation of communication - RTEC), new materials (with the participation of the holding company "PT Himkompozit" ).

"Rosteh has long established itself as a reliable partner of Chinese companies - emphasizes chairman Lei Fanpey CASC. - We are interested in developing cooperation with the Russian corporation in a number of areas. This is beneficial to both parties, since the competence and technology of Russian and Chinese companies can profitably complement each other. The potential for cooperation between Russia and China in the field of industry is huge, this potential can give an additional impetus to a number of areas, including the production of modern electronics . "

CASC Corporation specializes in designing and manufacturing different kinds of spacecraft, launch vehicles (including manned), strategic and tactical missiles of various types of ground-based equipment monitoring and control, and telecommunications equipment for military and civil purposes. In addition, the Corporation is authorized state authority on international space cooperation. The Corporation is also the largest shareholder on behalf of the state in the capital of China's telecommunications sector leader - Corporation ZTE (or " Chung Hsing " ).

Specialized foreign trade company CASC serves Chinese Industrial Corporation "Great Wall» (China Great Wall Industry Corporation (CGWIC)), which is the only specialized organization for the provision of services and supply of commercial launches of satellites in orbit, as well as relevant technical services.

Rosteh signed an agreement with the China Aerospace Corporation

MOSCOW, October 14. / TASS /. Economic Development Minister Alexei Ulyukayev believes that the international rating agencies, there is no reason to lower the sovereign rating of Russia, though "talk and rumors" about this walk.


"Now really have expectations, there is talk, there are rumors that the possible actions of international rating agencies to lower the sovereign rating of the Russian Federation", - said the minister told reporters.


Gref said in the case of such acts they would "indicate either incompetence or an engagement." The Minister added that there are no objective reasons for the downgrade is not.


"What is rating the rating agencies? Rating long-term solvency, credit worthiness. This, simply put, is the belief that we will be able to repay our foreign debt," - said Ulyukayev, adding that today's foreign debt amounts to less than 3% GDP, and the entire national debt - 11% of GDP. "That is, if you want such a debt can be repaid in one year," - said the Minister. According to him, the risks of non-repayment of debt are not available. "From whatever side you look, macroeconomic and financial structure is very stable and the risk that this meager foreign debt somehow miraculously not be extinguished, no," - said the head of the Ministry of Economic Development.


Ulyukayev also expressed the opinion that in the case of reducing Russia's sovereign rating will create a tense situation with the debt of the corporate sector. "In normal cases, it is primarily reflected in the cost of sovereign debt, borrowing. But this is not the case, because there is practically no foreign debt. But the problem is that almost automatic in these cases vary corporate ratings. They are more or some extent tied to the sovereign "- continued the Minister. 


At the same time, at a mass revision of corporate ratings, according to the head of the Ministry of Economic, worsen conditions of refinancing companies will also be difficult to access to the global capital markets, and in some cases will work covenants that are built into the agreement on borrowing.

sepheronx wrote:
I too have been following it and I have seen changes. Tooling industry, automotive, construction, agriculture, etc.  Better to spend excess money while they had it. But the thing is, they have the industries already making end goods. If you dont believe me, you should should check out the thread that I have noy updated in quite some time and sdelanounas.  These industries are not pushing hard for foreign sales of their products but that may change.

Reason why you say you have not saw any changes is because you refuse to acknowledge the changes that were made.

Back in soviet era, Canada was a major exporter of agriculture and construction equipment to USSR. Now they are major producers of said tech today and we barely export any of that equipment to them anymore (if at all). This is just one example.

Structual reforms only work if there are any reforms to be made or there is something less vague. Saying structual reforms is same this as "developing industry" and "diversify industry", all vague terms. Problem is, Russia manufactures goods from basic household to heavy industrial equipment. But you dont see many of these products outside the country. Why? Lack of prospect for exports. They already have a diversified economy. Just it doesnt make them the money oil and gas did.

On paper, Russian companies have huge foreign debts, and no way of refinancing them because sanctions effectively close Western capital markets to Russian borrowers. But with much of Russian corporate foreign debt in fact hidden equity investments from offshore zones, the figures seem much worse than they are.

International headlines are predicting a looming liquidity meltdown in Russia. Russian companies must pay down $134bn in external debt through the end of 2015, with a major spike of $32bn coming up in December 2014 alone, according to Russia’s central bank.

But an accounting trick widely used in Russia may be misleading pundits on corporate liquidity in Russia, say experts: for many larger Russian firms, foreign debt is nothing other than equity injections from shareholders incorporated in offshore zones such as Cyprus or the British Virgin Islands, with interest paid on the debt a tax-minimising strategy to take profits.

Real foreign debt may be almost half of the figure on paper. “The figure [$166 billion foreign corporate debt through 2015] is quite overestimated as it includes inter-company transactions. I think the realistic estimate amounts to not less than $90bn, which are to be raised from domestic sources," Russia's economy minister Aleksei Ulyukaev said in a boisterous speech to the Duma on October 8.

According to Russia's central bank, of $220bn in foreign loans taken out by Russian companies in Russia in 2013, close to half were raised in offshore jurisdictions, such as Cyprus, Ireland, Luxembourg and the British Virgin Islands, rather than from international banking centres. Counting through all the eurobonds, syndicated loans and bilateral loan agreements, gives a figure of $70bn-90bn in debt to be paid down through 2015, similar to the figure quoted by Ulyukaev, say experts.

...

Moreover, much of Russian companies' genuine foreign debt - some analysts says around half - can be attributed to Russia's state-owned energy giants Rosneft and Gazprom. Rosneft alone owes around $32bn to be paid by the end of 2014, debts incurred to pay for the acquisition of oil company TNK-BP in March 2013. But both Rosneft and Gazprom are receiving huge advance payments from China for contracted oil and gas supplies.

Hannibal Barca wrote:2 years ago nobody here had an idea about economy. Now most posts are very educated so you see the progress is very real.

For every dollar oil prices fall, the Russian budget loses an equivalent of $2 billion, Maksim Oreshkin, the head of the
Russian Finance Ministry's strategic planning department, told Bloomberg.