Russian Economy General News: #4

Austin wrote:Latest CBR Estimates , External Debt of Russia reduced to $559 Billion by 31st Match 2015

http://www.cbr.ru/eng/statistics/credit_statistics/debt_est_new_e.xlsx

Cyberspec wrote:

Austin wrote:Latest CBR Estimates , External Debt of Russia reduced to $559 Billion by 31st Match 2015

http://www.cbr.ru/eng/statistics/credit_statistics/debt_est_new_e.xlsx

An important detail announced in a recent statement by the head of the CBR is that the CBR will not be going down the route of expanding debt to try and stimulate economic activity...

I can't understand why they just don't follow the lead of "successful", "diversified" and "booming" economies to the west of Russia....like Spain for example .......

max steel wrote:Russian markets - largely reported to be dead and buried in the mainstream Western media in late December - are proving to be the spectacular out-performers of 2015 - with the world's top-performing currency, top-performing bond markets, and (I think) top performing major equity index (while the S&P goes nowhere)..


The Russian sovereign bond - the Rf30 - has soared 18% to 118, an almost unheard-of move for the debt of a major economy. The RTS has gapped up by about 50%, with the rouble in danger of becoming overvalued - having brushed against the 50 level - last Thursday.


How odd. What about all those downgrades to junk status? Next thing you know, we might think S&P and Fitch don't know what they're talking about, what with all those AAA ratings right before 2007-8... Now this .

max steel wrote:I've some info  which will LIGHTEN YOU UP further .  

Cyberspec wrote:It's too early to be popping champagne bottles, cause like I said earlier IMO it will be tough going for a year or two.

That said, the initial shock is probably over and personally I'm the most optimistic I've been on the medium/longer tem prospects of the Rus economy.

One thing that worries me if the oil price shoots up again (chances are it will by the end of 2015/early 2016), easy money starts flowing again and they get lazy like they did after the 2008 crisis. The stuff they're doing now they should've started doing back then (if not earlier).

kvs wrote:I think the CBR is in a very good position to achieve a cheap rouble target by dialing interest rates.   This is not like propping up
an expensive ruble by burning through reserves.   The CBR is also helped by western propaganda which smears Russia as an oil
dependent banana republic.   So the market will undervalue the ruble and is easy to spook with messages that no support of
any form will be given to the ruble.  

Whether the Russian economy responds to the stimulus in the near future we will have to wait and see.   But I get the impression
that there is a lot of flexibility and the credit for companies is there to launch new ventures.   In other words, the Russian economy
has matured after 2000 and the banking sector is functional and serving its role in lending to companies.   But the interest rates are
still too high.  Really, the biggest shock is the loss of cheap credit from western banks.   If Russian companies can tap into Chinese
and other Asian banks they will have obliterated this shock.   In the long run, the Russian banking sector will continue to grow and
the interest rates will continue to decline.

sepheronx wrote:

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MOSCOW, April 14. / TASS /. Russia must prepare for a period of low oil prices, said at the expanded board of the Ministry of Finance Minister Anton Siluanov head.

[b]"Experience has shown that low levels of prices can be kept for quite a long time. And we need to prepare for just such a period," - he said.

Without accumulation of oil and gas reserves this year would have to cut spending budget of the Russian Federation by 25%, said Siluanov.

"The policy of the last decade on the accumulation of surplus oil revenues allowed at the beginning of this year have in the Reserve Fund 5 trillion rubles. Without the reserves this year would have to cut spending by 25%," - he said.

Siluanov added that limit spending in the budget rules also brought results.

"If we had more actively increasing budget expenditures, as suggested by our opponents (which, incidentally, and so for 10 years increased from 16 to 21% of GDP), at the present time and we would have a debt under 30% of GDP and the budget deficit 6-7% of GDP, and the recession in the economy would start much earlier, "- said the Minister.

Among other measures, which have helped the budget system to resist external challenges, Siluanov also noted that in the second half of last year the government began to implement the first steps to optimize the budget.

By the end of 2014 managed to accumulate in the anti-crisis fund of more than 130 billion rubles (taking into account the funds accumulated since the beginning of the year, this amount now stands at 234 billion rubles); carried out measures to optimize the cost of more than $ 1 trillion rubles, reminded the Minister.

"It is thanks to this timely decision to form the stock of resources, which made it possible to implement a plan of priority measures to ensure the sustainable economic development and social stability", - said the head of the Ministry of Finance.

He also said that the government "responded quickly to the deteriorating situation in the banking system" running the recapitalization of the banking system by 1 trillion rubles, as well as increasing the maximum amount of insured deposits to 1.4 million rubles.

How to optimize budget spending

The Ministry of Finance considers it necessary to minimize the crisis support employment in 2016-2017 as one of the five important measures to optimize budget expenditures.

"What are the key areas of cost optimization can be distinguished? Firstly, the folding of single anti-crisis measures this year, primarily in terms of supporting employment. Secondly, optimization of costs and the size of the state apparatus" - listed Siluanov. Among the proposed measures it is also called - continued formation of spending on defense and security on the basis of the priorities of the country's defense and the real possibilities of the budget; reduction in the budget of the so-called psevdoinvestitsionnyh costs, as well as grants and contributions to the company's share capital; reduction in social spending.

According Siluanova, the largest share in the structure of the consolidated budget expenditures are expenses of a social nature. "Apart from the cost, there is also a large range of benefits of a different nature. The effectiveness of the system of social support remains low: does not apply the principle of means-tested pension benefits ceased to be fees associated with disability person, and actually began to play the role of the social benefit of a certain age" - the minister said.

He stressed that all this led to the formation of high and low effect commitments to overcome poverty.

On the Budget

According Siluanova, a new three-year budget (for 2016 and the planning period of 2017 and 2018 - Ed.) Must run structural changes in the economy.

"The task of the Ministry for this year - preparation of a new three-year budget, which should start the necessary structural changes in the economy. It is important to reduce the operating costs of the budget, leaving as many resources in the private sector. The budget can not replace the private investor and the state can not replace private owner. Solving these problems will help return the budget to the deficit-free (in 2017), "- he said.

According Siluanova, the ministry task is to reduce the $ 2 trillion in the budget-2017. "In the coming months to be a large-scale work on the optimization of the budget: we will have to cut about 2 trillion rubles from the planned expenditure for 2017. The volume of spending cuts will exceed the original level conditionally approved expenditures," - said the head of the Ministry of Finance.

As explained to journalists yesterday First Deputy Finance Minister Tatyana Nesterenko, the Ministry of Finance has already started work on a new three-year budget, which is considering the possibility of changing the rules of the budget due to the dynamics of oil prices.

Siluanov also noted that the use of reserve funds as a source of budget deficit should be reduced dramatically in 2016.

"In the baseline scenario, the Reserve Fund" lose weight "to 3.1 trillion rubles, or nearly two-thirds. When you save the current settings of the course and the cost of oil by the end of the volume of the Reserve Fund may be reduced to 1.5 trillion rubles. All this means that next year we need to drastically reduce the use of this source of financing of the budget, "- said the minister.

Economic growth

According Siluanova, the first quarter will be the weakest economic growth in Russia.

The Finance Ministry expects the II quarter outflows of $ 15 billion, a year - no more than $ 90 billion.

"We see a sharp slowdown in the outflow of capital - with a level of $ 77.4 billion in the fourth quarter of last year, it dropped to $ 32.6 billion in the first quarter of 2015. In the second quarter, we expect to reduce it to a level of $ 15 billion, and in general, he is unlikely to exceed $ 90 billion, "- he said.

The Bank of Russia expects capital outflows in the current year at $ 110 billion. In 2014 the CBR registered a record outflow of capital, which exceeded $ 150 billion.

The Ministry of Finance does not preclude recovery of economic growth in Russia in the second half of 2015. According to the forecast of the RF Ministry of Economic Development, at the end of 2015 Russia's GDP could fall by 2.5%, while next year growth is possible, with an average growth in the years 2016-2018 could reach 2.5-3%.

Restarting economic growth in Russia is possible only through private investment, said Siluanov.

What you need to restart economic growth? The answer is clear - private investment. No economy is developing rapidly, as if eats produced income. All fast-growing economies of many save and invest Anton Siluanov

According to him, in the structure of domestic demand, Singapore's gross is 38.1%, China - 49.3%, South Korea - 29% in Indonesia - 33.6%, India - 30.0% and the current consumption the state in these countries is only from 9 to 14% of GDP.

"We will not invest today about 19-20% of GDP, and thus to grow by 3-4% is possible. In the structure of domestic demand, investment should be around 30% None of the countries, which sharply increased its current consumption and government spending, not ensure sustainable long-term growth, "- said Siluanov.

Russian ruble and government securities - one of the most profitable assets this year, the minister said. "What we see today? Financial markets have stabilized, and the Russian ruble government securities are among the most profitable assets this year," - said Siluanov.

According to him, the first impact of the crisis on the financial markets is necessary, and then transferred to the effect on the real economy. Restoration is now in the same way, the minister added.

Inflation

Finance Ministry expects inflation in Russia by the end of 2015, 11%. Siluanov previously expressed the view that inflation this year will be lower than the official forecast of 12.2%. "At the end of the year is expected to reduce inflation to the level of 11% Gradually, more and more economists begins to join our estimates," - he said.

According Siluanova, the current inflation rate of 16.9% YoY due to one-off factors.

"Not yet resolved the issue with high inflation. The current 16.9% yoy mainly due to one-off factors: the effect of the depreciation of the real effective exchange rate and trade restrictions, which together gave more than 11 percentage points The main risk - not to let go of inflation from a single into a permanent "- the minister said.

He explained that this transition occurs when following the surge in prices starts indexing budget expenditures and salaries. "A key role in reducing inflation today belongs to the fiscal policy" - he said.

The Finance Ministry expect the emergence of private bonds indexed to inflation. "In the second quarter of 2015, we will offer the market denominated bonds, indexed to inflation. De facto, we create a new market - expect after us such bonds to finance long-term investment projects will produce and Russian companies," - he said.


On pension reform

The question of raising the retirement age need to be addressed urgently, says Siluanov. "We need to modernize the system of categorical benefits, means-tested allowance to enter in the implementation of measures of social support. We need to urgently address the question of the abolition of early retirement pensions, raising the retirement age. This will not only reduce the burden on the budget, but also to mitigate the impact of demographics on the weak economically active population" , - he said.

The Ministry of Finance considers it necessary restoration funded pension in 2016 in full.

"The key question - the full restoration in 2016 the rights of the insured persons on the funded pensions in accordance with their choice," - he said.

Siluanov reminded that this system was the need to reform and verification mechanism was launched on state guarantees of savings. "This year, funds received accumulation of the past, you are ready to restart next year," - said the minister.

According to the Finance Minister, the final decision should be taken at a meeting in the government.

Against the return of mandatory funded pension serves a social bloc of the government, which proposes to make a voluntary retirement format.

Loan for regions

Russia's Finance Ministry will provide new loans to the region only in the performance of their obligations under previous loans, said Anton Siluanov.

He noted that due to the high volatility in the financial markets very sharply at the beginning of the year there was a question refinancing regions.

"It was decided to lean on - to refinance commercial debt will be allocated 160 billion rubles of budget credits at the rate of 0.1%," - said Siluanov.

However, lamented the minister, the conditions for preparing these budget loans provided in the past year, "unfortunately, not fulfilled all the regions."

"This year we will give serious consideration to the monitoring of those agreements (to provide budgetary credits - approx. Ed.), Which will be concluded and new lending regions will be linked to the implementation of earlier agreements on loans," - said the Minister.

MOSCOW, April 14 - RIA Novosti / Prime. Finance Minister Anton Siluanov does not exclude that in the budget for 2016-2018 years will be decided on the transfer of the defense spending at a later date.

"We are always with the Ministry of Defense in the discussion and constantly find mutually acceptable solutions. Therefore, when preparing the new budget for 2016-2018 years also sit down, let's see what expenses are necessary and in full will be provided, which can be moved to a later date. I think that we will find a solution, "- said Siluanov reporters.

max steel wrote:What Sanctions? The Russian Economy Is Growing Again  



http://www.newsweek.com/putin-was-right-be-confident-about-russias-economy-321934

Werewolf wrote:

max steel wrote:What Sanctions? The Russian Economy Is Growing Again  



http://www.newsweek.com/putin-was-right-be-confident-about-russias-economy-321934

But russia is a shithole in decline

-TR1, Desperado