Russian Economy General News: #4

MOSCOW, March 4. / TASS /. The new version of the budget is formed at the $ 50 / bbl and course 61 rubles per dollar, Russian President Vladimir Putin at a meeting with members of the Cabinet.

In addition, according to the president, the document takes into account the probability of inability to attract financial resources in foreign markets. "It will be necessary to make appropriate changes to the law - he said. - I know that the government worked long and hard, you will need to continue the same work in the same mode with the deputies of the State Duma."

The Government of the Russian Federation at its meeting on March 5 will consider amendments to the budget, which would require a decision in the spring session of the State Duma, in turn, said Finance Minister Anton Siluanov.

"We are on the government tomorrow to consider amendments to the law on the budget - the minister said. - It takes into account the new macroeconomic forecast, the new environmental conditions."

According Siluanova, during the spring session of the need to prepare a series of decisions aimed at a balanced budget in 2017.

Finance Minister said that according to the amendments, federal revenues decrease by 2.6 trillion rubles, expenses - reduced by 300 billion rubles. Planned deficit of $ 2.8 trillion. "As a percentage of the runway, it increases from 0.6% other 3.8% of GDP," - said the Minister.

Amendments to the budget will be allocated to the State Duma during the week, he added. The Minister also noted that without optimization of the 1 trillion budget deficit would increase from 3.8 to 5.2% of GDP.

Deficit financing

According Siluanova reserve level at the end of the year will be 1.7 trillion rubles. The minister said that the Reserve Fund will be used in the current year of $ 3.7 trillion, including those 500 billion, which initially could be used this year. "Therefore, the deficit will be financed mainly from the reserves that we have accumulated in previous years," - said Siluanov.

"At the end of this year, we expect the size of the Reserve Fund to 1.7 trillion rubles," - said the head of the Ministry of Finance.

The volume of the Reserve Fund as of March 1, 2015 amounted to $ 4 trillion 720.74 billion rubles, in February it decreased by 19.5%.

As explained by the Ministry of Finance in February from the Reserve Fund has been withdrawn 500 billion rubles (from the accounts with the CBR to $ 3.56 billion, 3.12 billion and 0.51 billion pounds) and credited to a single account of the federal budget for the purpose of replacement is not received during the execution of the federal budget in 2015, the federal budget revenues and sources of financing the federal budget deficit, as well as additional oil and gas revenues of the federal budget.

Austin wrote:I wonder why they are so obsessed with running a balanced budget and rather would use the reserve fund greatly to balance out the deficit.

at the rate the reserve fund would just have 500 billion roubles by 2017.

My country India has been running 3-4 % deficit budget for many many years and I believe many countries do so why the fuss of OMG deficit is such a scarry thing ?

kvs wrote:

Austin wrote:Vedimosti mentioned Reserve Fund would drop to as low as 500 billion roubles in 2017.

Is Printing Rouble an option to loosen liquidy crunch at some point in time , How about printing says 5 trillion roubles more .......will this seriously impact inflation ?

Russia should print rubles because there is an actual shortage of them.   I gave an example of where barter transactions are still
taking place between large Russian businesses in well off parts of the country.    But the CBR and the Ministry of Finance are staffed
by monetarist true believers who worship at the alter of a god that nobody aside from a lunatic fringe in the west believes in.

Kudrin is not the only clown on the scene.  There are dozens of Kudrins still employed in critical positions.   Russia imports western
fad ideologies and actually tries to implement them.   Russia should import western economic pragmatism and see through nonsense
like monetarism.  

The way Russia needs to print rubles is to ingest dollar revenues from exports.   Russia should sell for rubles and not foreign currencies.
After 15 years of reforms, Russia still has the same problem of how to convert export revenues into domestic accounts.  A lot of those
dollars earned on exports are parked right back in offshore havens.   You can't blame the export companies for engaging in fraud.   They
are forced to do this because they cannot convert their earnings into rubles.   The idiots at the CBR and MinFin are paralyzed with
fear that rubles from revenues will create massive inflation in the economy because allegedly there is no capacity in the Russian
economy to absorb them.   Meanwhile there are tens of billions of dollars' worth of barter transactions still occurring.    

These CBR and MinFin idiots need to be shot.

Just Business: US Grows Russia Trade While Urging EU to Back Off

The head of the Russian State Duma's Foreign Affairs Committee, Aleksey Pushkov announced that the United States is "making money" by increasing trade with Russia while telling Europe to stop doing business with the country.

The State Department is pressuring EU countries to stop doing business with Russia, yet Russia's trade with the US grew by 7 percent in 2014, Pushkov tweeted.

"US State Department: 'This is not the time for business with Russia.' How is it that in 2014 trade between the US and Russia grew by 7 percent? They are pressuring the EU, but making money themselves."

Pushkov was referring to a statement by US State Department spokeswoman Marie Harf, who urged European countries not to do business with Russia on Monday, following agreements made between Russia and Cyprus last week.

During the visit, Cyprus President Nicos Anastasiades announced that all European Union (EU) member states without exception have experienced the negative effect of Western sanctions against Russia.

Russian-Western relations have deteriorated because of the situation in Ukraine. Last summer, the European Union and the United States imposed sanctions on entire sectors of the Russian economy, accusing Moscow of fueling the fighting in Ukraine. Russia, in response, has banned certain food imports from the countries that imposed the restrictions.

flamming_python wrote:I'm enjoying all this to be honest.

All the king's horses and all the king's men - have only succeeded in iniating a mild recession in Russia, that arguably it was falling to anyway, even before the Crimea episode and all the sanctions. At the same time, there are reasons to be optimistic and bullish about Russia's economic prospects, even despite all the rhetoric, sanctions and propaganda.

It's also fairly obvious that not only are the Europeans in the same position and at the verge of plunging back into recession themselves, owing partially to those same sanctions and lost trade - but that hedonistic Europe will last nowhere near as long as Russia in this big confrontation between Russia and the US; their own governments would quite literarly be lucky if they even enjoy half the popularity among their people that Putin enjoys among his. European unity meanwhile, was a stillborn myth from the very beggining - it simply doesn't really exist.

America's economy hasn't entirely escaped. I don't know what the whole deal with the Saudis lowering oil prices was, but it clearly hurt America more than Russia; a good chunk of their shale bubble enterprises have folded. What a sham.

Oh, and the Ukraine's economy has now entered a new phase - of active disintegration, and the Europeans have been suckered into paying for these smootchers.

I'm just waiting to see how this all develops next really
I think that as long as it doesn't all end up in WW3, Obama and company will end up with the standard cream pie all over their faces again.

magnumcromagnon wrote:I think it's time for Russia to start freezing U.S. energy company assets in Russia in retaliation:

US freezes $640mn in sanctioned Russian bank assets

I wonder why they are so obsessed with running a balanced budget and rather would use the reserve fund greatly to balance out the deficit.

nitwit wrote:As I know russian economy is smaller then California's somewhere Italy
And russia has so much billioners and twice as much poor ppl with decaying infrastructure
Do not count Moscow yes Moscow has more billioners then New York City, but it doesn't mean Russian ordinary citizens richer then Americans and one more point it was better to keep russia communist poor state where people struggle to get loaf of bread
Blame west for bringing capitalism to russia opening markets and making russians rich now russians think they are the world haha

AlfaT8 wrote:I'm not very good with economic things, i tried figuring out the average wage between Russia and the U.S, but i can't seem to find any solid sources, than i tried the unemployment rate, but apparently both the U.S and Russia are at 5.5%:

nitwit wrote:As I know russian economy is smaller then California's somewhere Italy
And russia has so much billioners and twice as much poor ppl with decaying infrastructure
Do not count Moscow yes Moscow has more billioners then New York City, but it doesn't mean Russian ordinary citizens richer then Americans and one more point it was better to keep russia communist poor state where people struggle to get loaf of bread
Blame west for bringing capitalism to russia opening markets and making russians rich now russians think they are the world haha

nitwit wrote:As I know russian economy is smaller then California's somewhere Italy
And russia has so much billioners and twice as much poor ppl with decaying infrastructure
Do not count Moscow yes Moscow has more billioners then New York City, but it doesn't mean Russian ordinary citizens richer then Americans and one more point it was better to keep russia communist poor state where people struggle to get loaf of bread
Blame west for bringing capitalism to russia opening markets and making russians rich now russians think they are the world haha

AlfaT8 wrote:Ok, let me clarify, i am only having trouble with this part:

nitwit wrote:As I know russian economy is smaller then California's somewhere Italy
And russia has so much billioners and twice as much poor ppl with decaying infrastructure
Do not count Moscow yes Moscow has more billioners then New York City, but it doesn't mean Russian ordinary citizens richer then Americans and one more point it was better to keep russia communist poor state where people struggle to get loaf of bread
Blame west for bringing capitalism to russia opening markets and making russians rich now russians think they are the world haha

KomissarBojanchev wrote:Where did the whole "as big as california" myth come from anyway? I think it's utter bullshit. There's absolutely no way for russia not have an economy tens of times greater than even the richest US state.

KomissarBojanchev wrote:If russia has an economy the same size as italy then italy is more powerful than germany because russia surpasses germany.