Russian Economy General News: #11

The government of the Russian Federation has set quotas for public procurement of goods of Russian origin

Mikhail Mishustin, Prime Minister of the Russian Federation, signed two decrees defining the list of goods for which the minimum share of purchases of such Russian-made goods will be established and the procedure for achieving it by the customer.

The quota mechanism is introduced both for state (municipal) customers working under No. 44-FZ "on the contract system for procurement of goods, works and services to meet state and municipal needs", and for legal entities with state participation that make purchases under No. 223-FZ "on procurement of goods, works and services by certain types of legal entities".

"The quota mechanism will strengthen the effect on the domestic industry of the already existing system of bans and restrictions on the purchase of imported products. Quotas will help to encourage customers to lay down Russian equipment and equipment immediately at the pre-project stage, as well as plan and build a procurement policy based on the existing competencies of Russian manufacturers," said Denis Manturov, Minister of industry and trade of the Russian Federation.

The quota size is differentiated taking into account the current competencies and capabilities of Russian producers, and it is also planned to gradually increase the quota. This will allow industrial companies to gradually increase their production capabilities, and customers to plan purchases for the medium and long-term periods.

It is important that only products included in the Russian and Eurasian registers of industrial products, the register of Russian radio-electronic products, and the Catalog of goods, works, and services can be counted to achieve the minimum share of purchases.

The quota mechanism will apply to electronic and telecommunications products, musical instruments, medical equipment and medical goods (a total of 107 items). The resolution also includes products from the rehabilitation industry. For example, the share of wheelchairs in public procurement from 2021 should be at least 50%.

Law No. 223-FZ provides for a more expanded list of goods (251 items), in addition to the items provided for under Law
No. 44-FZ. Quotas also apply to machinery, equipment and equipment(road construction equipment, mining equipment, machine tools, oil and gas equipment, and others).

As the mechanism is tested, its implementation is analyzed, as well as based on information about the capabilities of the domestic industry, the mechanism's operation will gradually expand. the quota mechanism also applies to other industries. In addition, it is planned to tighten the responsibility of customers for non-compliance with the established quotas. The instruction to prepare the necessary changes has already been given by the President of the Russian Federation.

A report form has been set for completing the minimum percentage of purchases. It provides, among other things, justification for the customer's inability to fulfill the minimum share of purchases. Reporting will be generated automatically in the unified public procurement information system. The Ministry of industry and trade of the Russian Federation has been designated as the authorized body to assess whether the customer has achieved the minimum percentage of purchases.

https://dfnc.ru/c106-technika/pravitelstvo-rf-ustanovilo-kvoty-na-goszakupki-tovarov-rossijskogo-proishozhdeniya/

A record amount of gold was exported and sold from Russia in 2020, more than 220 tons. What is the reason for this?
Throughout 2020, a pandemic is raging on our planet, which has given rise to the global economic crisis.

During periods of global economic crises, countries and businesses always buy gold. This is an axiom.

Moreover, it is necessary to actively buy gold in the 2020 crisis, with which only the Great Depression of the early 30s can be compared in severity. Since the world's major currencies, especially the dollar, can depreciate sharply. In the United States, a record $ 4 trillion was printed in 2020, which increased the US debt from $ 22 trillion. up to 26.5 trillion. dollars.

This is exactly what the leading countries of the world are doing, especially Switzerland and Great Britain are buying up a lot of gold, which have multiplied purchases since the beginning of April.

Russia in 2020 is doing exactly the opposite, selling gold in unprecedented, record quantities. Moreover, sales have increased sharply since the first days of April.

And selling gold during crises, how to move from dollar to rubles during a crisis.

Here are the numbers:

For 9 months of 2020, Russia sold 220 tons of gold, of which 98% was exported to London, and for the entire 2018 a little more than 10 tons were exported and sold, in 2019 - 120 tons.

220 tons is 10% of all reserves of monetary gold in the gold and foreign exchange reserves of Russia, which at the beginning of 2020 amounted to 2.270.56 tons (5th place in gold reserves in the world).

That is, Russia could easily increase its gold reserves by 200 tons, but did not do it.

The Central Bank of the Russian Federation, which for the past several years has been the largest buyer of gold in the world, for example, in 2018 it purchased 270 tons, has suspended purchases since April. And the head of the Russian government, Mikhail Mishustin, signed a decree on the issuance of general licenses for the export of gold and silver in the form of ingots.
From April to September inclusive, Russia received 12.5 billion US dollars from the sale of 220.5 tons of gold. In the third quarter, the Central Bank of the Russian Federation joined the sales, selling for the first time since 2007 1.2 tons of gold and foreign exchange reserves. In the second quarter of 2020, gold revenues exceeded gas revenues for the first time in history.

According to experts, the main ideological inspirer of record gold exports abroad in 2020 is Finance Minister Anton Siluanov, who is assisted in this by the head of the Central Bank Elvira Nabiullina.
What is the reason for the change in the policy of the Central Bank of Russia?

Due to the pandemic, there was a sharp drop in world prices for oil and gas, for the first time in history, prices for them went into negative territory for several days, plus the costs of combating the pandemic. As a result, the budget deficit amounted to more than 4 trillion rubles. And ahead is the 2nd wave of the pandemic and the intensification of the global economic crisis. In addition, the price of gold on the world market began to rise sharply, for the first time in history, exceeding the price of $ 2,000 per troy ounce (31.1 grams). They are now around $ 1,840. And at the beginning of 2020, the price of gold was less than $ 1,600.

The sharp increase in gold sales in 2019, compared to previous years, to 120 tons from 10-15 tons, is also associated with the rise in gold prices on the world market and low oil and gas prices.

More than 350 tons of gold was mined in Russia in 2019, in 2020 the record of the previous year will be exceeded, so the sale of 220 tons is not critical. If only it did not become a habit.

The Central Bank of the Russian Federation believes that gold should account for approximately 20% of the gold reserves (currently 21%), since gold is a relatively illiquid investment that is sensitive to market prices. But on the other hand, physical gold bullion is stored on the territory of Russia, which is more reliable, and dollars and euros are placed mainly in Western banks and they may be affected by US and EU sanctions against Russia, they may be seized.

Therefore, it is wiser to bring the amount of gold to 50% of the gold and foreign exchange reserves, and in 2020 it was necessary to use dollar reserves in connection with the possible devaluation of the American currency against the euro and other world currencies.

PS. There is another version why the Central Bank of the Russian Federation suddenly refused to buy Russian gold. The Central Bank of the Russian Federation, as a branch of the US Federal Reserve, received an order from the owners of world money. Therefore, instead of buying gold, Russia began to actively sell the "yellow metal". As a result, although gold has risen in price on the world market, it is not as critical as it could. In particular, the well-known economist, MGIMO professor Valentin Katasonov asserts this.

I believe both versions are correct.
https://zen.yandex.ru/media/id/5c35852e62248c00aa8743f6/iz-rossii-v-2020-godu-vyvezeno-i-prodano-rekordnoe-kolichestvo-zolota-bolee-220-tonn-s-chem-eto-sviazano-5fc921b56bcad04cbc4390e2

Russia bought gold when it was cheap and sold it when it was ultra expensive, now with Biden Dollar will raise again and gold will be cheaper to buy. Nothing particularly wrong here I would say, just Russia knowing how the Western gold scam works and taking advantage of it...

Backman wrote:

Kiko wrote:A record amount of gold was exported and sold from Russia in 2020, more than 220 tons. What is the reason for this?
Throughout 2020, a pandemic is raging on our planet, which has given rise to the global economic crisis.


Here are the numbers:

For 9 months of 2020, Russia sold 220 tons of gold, of which 98% was exported to London, and for the entire 2018 a little more than 10 tons were exported and sold, in 2019 - 120 tons.

220 tons is 10% of all reserves of monetary gold in the gold and foreign exchange reserves of Russia, which at the beginning of 2020 amounted to 2.270.56 tons (5th place in gold reserves in the world).

Do you have a source for this ?

Russia's gold mine exports have nothing to do with the Central bank of Russia's gold reserves. There are international mining corporations in Russia who extract gold and sell it on the international market. These count as gold exports in Russia's balance of trade.

Then there is the central bank who buys and sells gold.

Central Banking.com had Russia's gold holdings at 2299 in October 2020. And the World Gold Council has Russia's gold at 2298.5 currently in December. I am not seeing a 200+ ton dive in Russia's gold holdings.

https://zen.yandex.ru/media/id/5c35852e62248c00aa8743f6/iz-rossii-v-2020-godu-vyvezeno-i-prodano-rekordnoe-kolichestvo-zolota-bolee-220-tonn-s-chem-eto-sviazano-5fc921b56bcad04cbc4390e2

What a load of crap!

Bank of Russia retains key rate at 4.25%
Inflation is developing above the Bank of Russia’s forecast and is expected to lie within the range of 4.6-4.9% at the end of 2020, the regulator said.

MOSCOW, December 18. /TASS/. At its last meeting this year, the Bank of Russia decided to once again retain the key rate at 4.25% per annum, indicating a more significant and lasting impact of one-off pro-inflationary factors and an increase in inflationary expectations, according to the regulator’s press release.

"On December 18, 2020, the Bank of Russia Board of Directors decided to keep the key rate at 4.25% per annum. Inflation is developing above the Bank of Russia’s forecast and is expected to lie within the range of 4.6-4.9% at the end of 2020. One-off proinflationary factors are exerting more significant and prolonged upward influence on prices amid the growth in households’ and businesses’ inflation expectations and supply-side restrictions. The worsening epidemic situation in Russia and worldwide is constraining economic activity significantly less than in 2020 Q2," the regulator said.

The Bank of Russia has downgraded its inflation outlook for 2020 from 3.9-4.2% to 4.6-4.9%. "Inflation is developing above the Bank of Russia’s forecast and is expected to lie within the range of 4.6-4.9% at the end of 2020. This is largely related to the effect of one-off proinflationary factors in certain markets and the continuing pass-through of the ruble’s earlier weakening to prices. However, these factors may exert more prolonged upward influence on prices amid the growth in households’ and businesses ’inflation expectations and supply-side restrictions," the regulator said.

In November, annual inflation rose to 4.4% (against 4% in October), according to the press release. According to an estimate as of 14 December, it was 4.7%. "According to Bank of Russia estimates, current consumer inflation indicators reflecting the most sustainable price movements also grew in November and were close to 4% (annualized), the Central Bank noted.

The Bank of Russia noted a pause in the recovery of the Russian economy in the fourth quarter, but at the same time notes that the impact of the pandemic on the economy was significantly less than in the Q2. Taking this into account, Russia’s GDP decline may reach around 4%, the regulator said.

"High-frequency indicators of economic activity point to a pause in the economic recovery in 2020 Q4. However, the worsening epidemic situation in Russia and worldwide is constraining economic activity significantly less than in 2020 Q2. This is related to the targeted nature of restrictive measures and the adaptation of households and businesses to the new conditions. In view of the above and given higher than expected Q3 data, the 2020 GDP decline may reach around 4%,"the regulator said.

At the same time, the regulator expects Russia’s economy to resume growth in the spring of 2021 as the coronavirus situation returns to normal. "In spring 2021, the Russian economy is expected to resume its sustainable growth as the coronavirus situation returns to normal. The medium-term economic growth path will be largely influenced by further coronavirus pandemic developments in Russia and across the globe, the nature of the recovery of private demand in the context of potential change in consumer and business behavior, as well as by the upcoming budget consolidation," the Bank of Russia said.

Accommodative monetary policy will continue to support the economy throughout the next year, the regulator added.

https://tass.com/economy/1237019