Russian Economy General News: #2

BEIJING, November 10 (RIA Novosti) - Russia will not increase its state deficit and will hold it at a controllable level of no less than 15 percent of the gross domestic product, Russian President Vladimir Putin said Monday.

“There will be no growth in the state deficit. We plan on holding it at a safe controlled level of no less than 15 percent of the GDP,” Putin said during his speech at the Asia-Pacific Economic Cooperation summit in China.

MOSCOW, November 10 (RIA Novosti) – The Russian Central Bank has dumped the idea of developing a stress scenario for the development of the economy that would account for oil prices hitting $60 per barrel and believes oil prices will not drop below $80 per barrel up to 2017, the bank said in a statement Monday.

The most pessimistic economic forecast also takes into consideration western sanctions that will most likely remain in place until the end of 2017, the statement reads. The Central Bank's base scenario suggests that oil prices will reach $95 per barrel in 2015 and will be corrected to $92 per barrel by 2017.

“The results on the net personal outflow of capital for 2014 is assessed at the level of $128 billion, which is higher than the forecast,” the statement reads.

Russia’s economy will be stable even if the price of oil in 2015-2017 remains at $80 per barrel


The country’s Central Bank can use instruments to slow inflation to 6-6.5 percent in 2015 and to 4-4.6 percent to the end of 2017, Central Bank First Deputy Chair Kseniya Yudayeva said.

“The Russian economy will be stable even if the price of oil remains at $80 per barrel throughout 2015-2017 and [western] sanctions are not reversed. The Central Bank has instruments it can use in any development of events to gradually lower inflation to 4.0-4.6 percent by the end of 2017, and approximately 6.0-6.5 percent in 2015,” Yudayeva said.

The Central Bank’s base scenario suggests that oil prices will return to $95 per barrel in 2015 and will be corrected to $92 per barrel by 2017.

Yudayeva said Russia’s economy would grow by more than 3 percent under favorable conditions, but even if conditions turned negative, the economy would still have a positive outcome by 2017.

According to Yudayeva, in a favorable development of events, Russia's economy will grow by more than 3 percent by 2017, but even if conditions turn negative, the economy will still show positive growth.

The Russian financial regulator, however, has significantly raised its capital outflow forecast for 2014 to $128 billion against $90 billion previously expected .
Early in October, Yudayeva announced that the Russian financial regulator was working on a shock scenario for financial policy in the case of a plunge in oil prices. There were three options in the scenario, with the toughest of them suggesting an action plan should prices fall to $60 per barrel.

Russian Economic Development Minister Alexei Ulyukayev said, however, that he does not believe in such a dramatic price decline. The Russian Finance Ministry said that it expects global oil prices to stabilize at $90 per barrel in the medium-term, although there could be a short-term fall in 2015.

Senior politicians, including President Vladimir Putin and Finance Minister Anton Siluanov, repeatedly stated that Russia's 2015 budget for will be executed in any macroeconomic situation, regardless of inflation, oil prices or any other factors.

Elvira Nabiullina: Russia's Central Bank plans to temporarily limit ruble liquidity for banks


“We will temporarily limit ruble liquidity because it’s not only being used for financing the economy, but also for playing on the currency market,” bank head Elvira Nabiullina said.

Elvira Nabiullina said the Central Bank would step in whenever it needs to in order to regulate the growth of speculative demand on the currency market.
“The Central Bank will ingress onto the currency market whenever and in whatever volume that is needed in order to curb the speculative demand," Nabiullina said.
She also said that the Central Bank would halt regular currency intervention, in particular the sale of $350 million a day if the rate of the ruble drops lower than the level defined by regulations.

On November 5, the Central Bank said that it drastically decreased its support for the national currency, which has weakened the ruble. The ministry added it was pursuing the transition to free floating currency exchange rates.

On November 8, the Russian Economic Development Ministry said it did not expect a recession in the first quarter of 2015, though noting that the period between February and March 2015 could be acute.

Russia's Economic Development Minister Alexei Ulyukayev said that the ruble's exchange rate would strengthen in the short term, stressing that there was no need to introduce foreign exchange restrictions.

Earlier on Monday, Russian President Vladimir Putin said that Russia expected the ruble's fluctuation to end soon and was ready to use currency intervention, if necessary, in order to stabilize the market.

"We are currently observing speculative jumps in the exchange rate [of the ruble] but this will soon end, keeping in mind the actions the Central Bank is taking in response to speculators on the currency market," Putin said.

Russia's national currency, the ruble, has lost about a quarter of its value since the beginning of 2014.
In recent months Russia's economy has been exhibiting signs of a minor slowdown due to geopolitical tensions and Western sanctions over Russia's alleged role in the Ukrainian crisis and falling oil prices.

According to the European Commission's forecast published earlier in November, a gradual recovery of the Russian economy may be expected only in 2016.

Austin wrote:Good Read

Russia’s Vulnerability to EU – US Sanctions and Military Encroachments

"There are some calculations, they show how much we additionally spent in foreign exchange reserves, depending on the external conditions. Foreign exchange reserves we have enough, more than $ 400 billion, but if they spend unwisely and try to play against the fundamental market trends, we arrive at the same results, only after some time and with less gold reserves. That is, if to continue this policy, we would simply have reduced the amount of gold reserves. The same thing I can say to those who suggest fixing rate. This means absolutely unreasonable waste of gold reserves, "- noted Elvira.


She stressed that the GCR "We need including, if there is a speculative attack on the currency market in order to protect its national currency."


Also, The word Nabiullina capital outflows in the current environment will not put additional pressure on the ruble.


"That depreciation of the ruble, significant that has already happened, it is sufficient to balance the whole balance of payments. Therefore, in our opinion, by the outflow of capital in the current environment of additional pressure on the ruble depreciation should not be" - she said.


Russian banking system feels stable even with a significant depreciation of the ruble, the head of the Central Bank. "We do stress tests on a regular basis and see how our banking system will withstand certain negative factors. Indeed, even at a significantly reduced rate of our banking system feels stable enough" - said Elvira. According to her, Russian banks have accumulated "good currency buffer".


"And the reduction of access to external financing markets are largely offset the foreign exchange repos. Here we provide ruble liquidity to banks on loans denominated broadcast into our economy."

Viktor wrote:Nice

Russia, China sign technical agreement for Rosneft to supply 5 mln tons oil additionally

Nice

"Roselektronika" will create a production cluster in Novosibirsk

Ruble is free floating as of now ...

Russia's Central Bank Allows Ruble to Float Free

and Japan disobeying its masters

Gazprom Considering Japan's Offer on Gas Pipeline to Hokkaido

trade surplus still growing

Trade surplus in Russia in January-September increased by 5.5%

Flyingdutchman wrote:http://www.theguardian.com/world/2014/nov/07/rouble-crashes-russian-economy-brink-recession-currency

Flyingdutchman wrote:http://www.theguardian.com/world/2014/nov/07/rouble-crashes-russian-economy-brink-recession-currency

Viktor wrote:Now this is a news I like to read

Putin: Russia to Create Industrial Development Fund for Long-Term Projects

Austin wrote:
What do you mean by Fully Monetized ?

And how do countries like EU Euro , US $ , Japanese Yen and British Pound trade in their own currency without facing such issue ?

MOSCOW, November 10. /TASS/. Russia is speeding towards the adoption of anti-offshore legislation. The State Duma (lower house of parliament) on Tuesday will hold the first reading of amendments to the Tax Code obliging both individuals and legal entities to notify the authorities of their foreign properties and profits. This step is in line with international trends and requirements posed by the Russian authorities, but experts tend to interpret it differently. Some argue it is the wrong time to tighten the screws, because the current pressures on businesses are already too high, while others claim that such restrictions should have been taken a while ago.
The anti-offshore bill, authored by a group of legislators from different factions and supported by the government, if adopted, will establish a legal basis for exposing commercial structures that are not Russian tax residents but in fact remain under the actual control of Russian legal entities or individuals. The newly coined term for these is “foreign controlling entity” or “controlling person.” Starting from 2015, the controlling entities or persons will be obliged to notify the tax authorities of their participation in a foreign company and also to declare and confirm profits, which then will be taken into consideration in levying taxes in Russia.
During the first two years following the adoption of new legislation, the measure will apply to those who control 50% of an offshore asset. In the longer term, the taxable stake will be lowered to 25% and possibly, even to 10%.
The legislators hope that at least 20-30% of capital now leaving the country will be repatriated in the form of taxes. According to expert evaluations, offshore companies are involved in 40% of Russia’s foreign trade. Over the past two decades, an estimated $800 billion to $1 trillion has been taken out of the country.
Not only small and medium companies, but also big business giants related with Russia’s state-run companies prefer to operate offshore in order to contain costs and run their businesses more effectively.
When the bill was discussed in the government, there emerged a dispute between the Ministry of Finance, an advocate of the “hard line,” and the Economic Development Ministry, which proposed de-offshorization only for the defense-industrial complex and for companies deriving 50% of their revenues over the past three years from state defense contracts. In the end, the hard-liners gained the upper hand. All crucial ‘system-forming’ enterprises should have domestic registration.
Experts are divided over whether the proposed measures will benefit the Russian economy.
The director of the FBC Institute of Strategic Studies, Igor Nikolayev, is quoted by the daily Novyie Izvestia as saying that the de-offshorization vector is correct, but its timing is very wrong, for it will merely increase tax pressure on businesses, which are already big enough.
Attempts at forcing major Russian companies to return to Russia would be fraught with considerable risks, such as inability to draw considerable financing from abroad or conclude certain foreign economic deals and soaring production costs, the daily Kommersant quotes senior counsel at the legal firm Sameta, Ksenia Levina, as saying.
“We are ten years late with the adoption of such legislation, but it has been drafted in full compliance with the world trend of tightening control of financial flows,” senior lecturer at the stock and investment market department at the Higher School of Economics Alexander Arshavsky told TASS.
He foresees no adverse effects harsher anti-offshore legislation might have on the Russian economy. “These measures are targeted not against those companies which are involved in active projects, but against those whose participation is passive, companies which merely get dividends. The income is generated in Russia and they get it through chains of offshore firms. The taxes they pay to the Russian budget is meagre. Some pay nothing at all," Arshavsky said.
ITAR-TASS may not share the opinions of its contributors

kvs wrote:

Austin wrote:Good Read

Russia’s Vulnerability to EU – US Sanctions and Military Encroachments

A weak article full of tropes....  

Cyberspec wrote:

kvs wrote:

Austin wrote:Good Read

Russia’s Vulnerability to EU – US Sanctions and Military Encroachments

A weak article full of tropes....  

IMO, the article does make some valid points but is on the alarmist side

Also, I think this military threat to Russia is exaggerated beyond comprehension. The latest reinforcements sent to Eastern Europe are miniscule and to be honest remind me a bit of "Dad's Army". It takes contributions from 4-5 countries to scratch together a couple of squadrons....so unless they're prepared to throw some serious money into re-armament, this so called threat is just more smoke and mirrors and a  PR scare

Viktor wrote:Russia, China sign technical agreement for Rosneft to supply 5 mln tons oil additionally

RTN wrote:

Viktor wrote:Russia, China sign technical agreement for Rosneft to supply 5 mln tons oil additionally

By far the biggest beneficiary of the sanctions imposed on Russia has been China.

China is now purchasing oil from Russia at dirt cheap prices. No wonder the price of oil is falling globally.

Russia should start selling oil to Japan, South Korea, South East Asia and even Africa and India.

In this way Russia will not remain dependent on China.

kvs wrote:What oil to China?  The current oil price has ZERO to do with Russia-China NATURAL GAS deals.  

As for the price of natural gas, Russia got the same prices it gets from the EU: $385 per thousand cubic meters.   And
this is not a fixed price, it will go up with inflation and if the oil price goes up.   The oil will go up and the current drop
is not some new epoch of cheap gasoline.

November 11th. FINMARKET.RU - Head of the Synodal Department for Church and Society, Archpriest Vsevolod Chaplin called for discussions about how to make the Russian economy more independent, and offered to consider the creation of an orthodox banking.
"We are told that the famous crisis with the fall of the ruble against the dollar is an indicator of the state of our economy. And who said that? We can see that the economy did not fall on Russia the quarter, which fell on the ruble . It means someone is trying to assess We are not on the real state of our economy, and by the rules of the information bubble that inflated first, then down, "- said the priest at a meeting in Moscow with the club" Russian businessman "who joined the World Russian People's Council.
According to him, "We are trying to convince that the country is experiencing a disaster, but in fact we can see that this is not the case that the estimates that are given by the rules, and under the direction of the means of external centers are not completely correlate with reality ".
"Therefore, the question immediately arises: why we can not develop their own criteria for assessing the state of our economy and its future?" - The representative of the Church.
He called for a broader discussion about how to ensure that Russia does not depend on management decisions and the estimates "are not invented by us, not by our rules," is it possible to create not just an independent banking systems in the independent relationship with those or other centers without external mediation center in New York or Hong Kong, "a system that would be based on ethical rules."
Pointing to the fact that it turned out at Muslims who refused to usury, loan interest, but 'efficiency in Islamic banking is not abated, "the priest suggested to think about" whether Russia can offer orthodox banking system without usury, included in direct relations with China, the Islamic world, in other growing centers of influence in the world "; how to refuse the dictates in relation to the domestic economy of the global centers, "which are increasingly showing their unfriendly"; may waive those maximum rates and economic instruments, "which are associated with us unfriendly center", can "tighten the global economy, according to our own rules."

November 11th. FINMARKET.RU - Prime Minister of Finland Alexander Stubb called for tougher sanctions against Russia.
Tuesday's broadcast television Finland, he said that the resumption of the fighting forces in the Ukraine the EU to reconsider the tightening of sanctions against Russia. According to the head of the government, "it is the most effective method of influence on Russia."
"Money - the best mediator at the conclusion of peace. This is the only method: soft, but at the same time hard, which we can use, and it should be applied" - quoted Stubb portal broadcaster Yle.
"We are in many ways on the doorstep of the Cold War," - said the prime minister. In these circumstances, Finland should act in two directions: follow the general lines of the EU and ensure that the voice of Europe was united. "It makes no sense to drive Finland in the gray area in which we were in during the last cold war", - said the prime minister.
"At that Finland should maintain good relations with Russia on a political level, especially at the level of civil servants," - said Alexander Stubb.

sepheronx wrote:http://www.finmarket.ru/database/news/3860304
Prime Finland called for tougher sanctions against Russia

November 11th. FINMARKET.RU - Prime Minister of Finland Alexander Stubb called for tougher sanctions against Russia.
Tuesday's broadcast television Finland, he said that the resumption of the fighting forces in the Ukraine the EU to reconsider the tightening of sanctions against Russia. According to the head of the government, "it is the most effective method of influence on Russia."
"Money - the best mediator at the conclusion of peace. This is the only method: soft, but at the same time hard, which we can use, and it should be applied" - quoted Stubb portal broadcaster Yle.
"We are in many ways on the doorstep of the Cold War," - said the prime minister. In these circumstances, Finland should act in two directions: follow the general lines of the EU and ensure that the voice of Europe was united. "It makes no sense to drive Finland in the gray area in which we were in during the last cold war", - said the prime minister.
"At that Finland should maintain good relations with Russia on a political level, especially at the level of civil servants," - said Alexander Stubb.

Isn't Finlands economy very tied to Russia?  Seems not like a very smart move for Finland.

Rmf wrote:https://www.youtube.com/watch?v=d2M5l__vCwo