Russian Economy General News: #6

MOSCOW, April 19 /TASS/. Russian Prime Minister Dmitry Medvedev said that Russia could use internal sources for development without foreign borrowings. That is why no one will force it to its knees, he said.

"We are solving our financial problems with the help of internal resources. This is our common victory. It means that we are can develop by using the internal sources," the Russian prime minister told Russian State Duma deputies on Tuesday as he gave an account of the government’s work in 2015.

"No one has forced us to our knees. Unlike other countries, we are not begging with an outstretched hand as we used to do in the 1990s. We are not waiting for the International Monetary Fund chief to come to this country so that we could beg him for some money in order to be able to run the budget," the Russian prime minister said.

"We can draw up our budget without that!" Medvedev stressed.


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http://tass.ru/en/economy/871033

MOSCOW, April 19. / TASS /. The Russian government should use the National Wealth Fund to support large-scale projects that change people’s lives, Prime Minister Dmitry Medvedev said in the State Duma 9lower house of parliament) on Tuesday.

"We are obliged to maintain the largest projects that change lives of people in the North, in the Far East and Siberia. Such projects receive support from the National Wealth Fund," he said.

Three-year budget planning

Russia will return to three-year budget planning, Medvedev went on to say.

"We are returning to three-year planning. This provides us with more clear vision of prospects," Medvedev said.



Government will not propose budget amendments during spring session

Accordinng to Medvedev, the Russian government will not make amendments to the budget during the spring session.

"We’ve managed to avoid adjusting the 2016 budget, although at the beginning of the year such a move looked inevitable," he said. "We will not propose budget amendments during the spring session."

The two tasks were addressed in parallel with the need for keeping the budget deficit within sensible limits, stabilizing the situation on the financial market and controlling inflation. According to his estimates, the 2015 budget deficit was within an acceptable 2.4% of the GDP, 50% below the crisis level of 2009.

"We will maintain the budget deficit at an economically safe level further on," Medvedev promised. "Recapitalization of lending institutions has stabilized the operation of banks. Deposits outflow has been reversed into influx. Banks have been increasing lending to the economy, although not at a pace we need."

Share of non-oil revenues in budget rises to 60%

The prime minister pointed out that the share of non-oil budget revenues had risen to 60%.

"The structure of our budget revenues has changed. The share of non-oil budget revenues, not related to the sales of oil and gas totals around 60%," the official said. "For the most part, it is connected with the decline of energy prices. At the same time, the measures that we have taken, worked," he added.


Russian government won’t increase taxes until 2018

Medvedev noted the government plans to maintain the current size of taxes for the next two years.

"Today, when the price of oil has fallen, there is a temptation to increase budget revenues by raising taxes, but our position is fundamentally different. We don’t plan to increase taxes until 2018," the Prime Minister said when presenting a report in the State Duma (lower house of parliament).

"Nobody needs the return of salaries in envelopes (unofficial salaries which imply tax evasion -TASS) and an increase in capital outflow," he added.

Speaking about expectations of businesses, Medvedev mentioned predictability of the government’s actions in particular in terms of tax policy.

"Businesses simply want the state not to hamper their work and not to bother them with checks," he said.

According to Medvedev, by now the government had managed to remove many of state regulation barriers.

"We worked on the "roadmaps "of the National business initiative, simplified procedures in construction sector, registration of property rights, connection to power grids, in tax and customs administration," the Prime Minister said.

Russia has shown steady progress in the rankings that evaluate the business environment," he said.

For example, in several years, Russia has moved up from 120th to 51st position in the World Bank's "Doing Business" (Doing Business) rating, Medvedev said.

Oil prices collapse shocked Russian economy

According to the head of government, the oil prices collapse heavily shocked the Russian economy.

"Several adverse factors at once strongly impacted our economy," the Prime Minister said. "Low prices for oil and other commodities" is the first among them, he said. "The point is in the speed of collapse and not merely in the depth of their decline - oil prices declined nearly a half in six months; this is an unprecedented record," Medvedev added.

"Not a single economy is capable of quickly adapting to such a dramatic decline of export value,’ Medvedev said. "It heavily shocked the Russian economy also," he added.

The "outside sanction pressure" was also a negative factor, Medvedev said. "The door to a significant portion of international credit resources and the modern technologies market is still closed for Russia,’ he added.

The factor of "instability and poor predictability of global markets more and more subdued to political laws instead of economic ones" also played its role, Medvedev said. .


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http://tass.ru/en/economy/870907

Madeleine Albright: 'Russia Is a Bangladesh With Missiles'

MOSCOW, April 23. /TASS/. The same level of corruption has been reported in Russian and US business, according to a survey by international financial services company Ernst & Young (EY).

EY interviewed 2,825 business executives in 62 countries from October 2015 to January 2016.

Thirty-four percent of respondents in Russia, the United States and Poland agree that bribery and corruption are widespread in their country. Among the countries with the highest reported level of corruption are Brazil (90%), Ukraine (88%) and Thailand (86%). Only residents of Finland said there is no corruption in their country (0%), followed by Saudi Arabia, Sweden and Denmark (four percent each).

"Russia has continued to develop and extend the scope of its anticorruption legislation with an increased number of government officials now required to disclose their personal income and potential conflicts of interest," EY said in its 14th Global Fraud Survey "Corporate Misconduct - Individual Consequences."

"Russia has also maintained a focus on fighting corruption both at a regional level, with several governors and officials under criminal investigation, and also at a multinational level, repatriating several well-known businessmen whose fortunes are alleged to have been accumulated through fraudulent schemes," the survey added.

Jonathan Adelman Professor, Josef Korbel School of International Studies, University of Denver

The Western image of Russia and Putin in recent years has been very negative. President Obama has publicly called Vladimir Putin a “schoolboy who slouches in his chair in the back of the room“ and derided his country as a mere “regional power.”

This begs the question: how Russia could again become a major power after the disintegration of the Soviet Union in 1991? How could Putin do this without an agrarian or consumer revolution and with the massive drop in the price of oil? If Putin is a terrible leader, then how can you explain successful interventions in Georgia (2008), Crimea (2014), Ukraine (2014-2016) and Syria (2015-2016)?

Putin, however, is actually a very shrewd leader with a brilliant Foreign Minister, Sergei Lavrov, who relies on a capable Foreign Ministry. Putin has rebuilt Russia’s military capability by spending $49B a year on security. Russia retains 1,790 strategic nuclear weapons. With over 140 million people and 13 million college graduates, Russia has nearly a million first-class scientists, engineers and technicians, most of whom work for the military.

Many former great powers are now no longer major powers. Japan, which smashed the Russian army in the 1904 Sino-Japanese War, occupied much of China from 1937-1945 and has a four trillion dollar economy is no longer a great power. After its defeat in World War II capped by the American dropping of atomic bombs on Hiroshima and Nagasaki and American post-war occupation, Japan has sworn off further intervention in the world and refused to acquire nuclear weapons.

Europe, which once teemed with great powers such as Germany, France, England and Austro-Hungary, now has gone in another direction. Germany soundly beat the Russians in every World War I battle and came close to doing the same in 1941 and 1942. Today with weak power projection the three main powers have less than 1,000 mainline battle tanks and few aircraft carriers. Weak economic growth (1.5%/year), disputes among its 28 members, migration from the Middle East, serious problems with weaker members such as Greece, promote domestic over international issues.

China, with its ten trillion dollar GDP, over two trillion dollars of exports, over three trillion dollars in its reserve fund, 1.35 billion people and 3.7 million square miles of territory, is a future great power. It has made huge economic progress since Deng Xiaopong launched the Four Modernizations in 1978.

Yet, its remaining problems are staggering: enormous air pollution, 675 million peasants, huge governmental corruption, authoritarian one party dictatorship, lack of rule of law, rapidly aging population, hundreds of thousands of children raising themselves and only $7,500 GDP/capita. Its military, while boosted by 150 billion dollars of spending, still needs another decade to become a truly modern force.

India has 20 percent illiteracy, 300 million people without electricity and a $1,300 GDP/capita that is less than three percent of the United States. It faces Pakistan soon with 200 atomic bombs. India, with over a billion people, will be a major power but not for several decades.

Then there is the United States, the sole global superpower since victory in the Cold War and one of two superpowers in the world since 1945. Its 18 trillion dollar economy, 17 of the world’s top 20 universities, world leadership in high technology, over 550 billion dollars in military spending and 330 million people give it serious advantages over Russia. But, with the rise of popular neo-isolationist Presidential candidates, the slowest economic recovery since the Great Depression, decline in its manufacturing sector, administration talk of reducing the size of the American military to the 1940 level, and the Obama semi-withdrawal from the Middle East, the door that had been shut to Russia has been open.

The unthinkable has become a reality. Russia, seemingly finished after its defeat in the Cold War, now is emerging as a prospective great power challenging the West. Russia has done the unthinkable—become a great power filling the void left by other former great powers that have now shrunk in size, power and influence.

sepheronx wrote:Gee, for 1 month it was 6% unemployment? I wonder how he feels of our over 7% unemployment, or Greece 20%.

Russia apparently still has second highest migration (people moving to Russia), so it may be a factor as well.

MOSCOW, April 26 -. RIA Novosti Russian Banks in 2016 after provisions will have a total capital, suitable for lending to the economy, amounting to more than 2 trillion rubles, said deputy chairman of the Central Bank of Russia Vasily Pozdyshev at the parliamentary hearings in the Federation Council.

"The total capital of Russian banks now about 9 trillion rubles, which is more than 3 trillion rubles of capital stock for lending to the economy ... Even if the banks will create this year about, or even a little more than a trillion of reserves, it remains more than 2 trillion rubles of capital for lending to the economy" - he said.

But effective lending is possible only if fair competition in the market, have thus Pozdyshev. "In this regard, we support initiatives that are aimed toward greater transparency of credit institutions", - said the deputy chairman of the Central Bank.

In a more long-term credit Pozdyshev assessed the potential of the Russian banking system in the amount of about 20 trillion rubles. "It is about 20 trillion (rubles - Ed.) Lending capacity, which is in the banking system already exists, and the lending capacity to be used over the next few years", - he explained.

"That is, the reserve for loan growth with equity point of view, we have achieved", - concluded Pozdyshev.

The banking system must have a capital reserve so-called "capital cushion" for lending to the economy and that the stock they have, said deputy chairman of the Central Bank.

Last year, the Russian government decided to recapitalize selected major and regional banks by nearly a trillion rubles through the OFZ mechanism, banks have committed themselves, he recalled. "The banks have undertaken certain obligations. We check how they carry out these obligations" - he added Pozdyshev.

In addition, the regulator went to meet the banks by reducing the basic capital adequacy ratio from 10% to 8%. With this measure, the banks have a reserve of capital and capital adequacy ratio of the banking system is now more than 12% at the minimum 8%, Central Bank deputy chairman stressed.