The recession in the Russian economy is worse than acute crisis, said the Minister of economic development Alexei Ulyukayev in September last year. After a little over a year no one will deny that the situation facing Russia's economy, is a crisis that, apparently, will last at least two years. While all the actions of the authorities intended to react to its symptoms. "We, unfortunately, proactive policies are not," admits the Minister. In an interview with RBC Alexei Ulyukayev tells what measures will the government and the Bank of Russia to solve problems on the currency and financial market, what support to expect for the real sector of the economy and what will happen if the sanctions will last long.
Rich in the risk zone
– Alexey Valentinovich, most of the year, economists wondered, did the Russian economy into a technical recession. December has put everything in its place. How will a prolonged recession?
– High inflation due to the effect of the transfer of devaluation negative impact on real wages and real income, the demand for goods and services go into the negative plane. According to the scenario, which assumed oil prices at $80/bbl., GDP will decline by 0.8%. Unfortunately, the market situation continues to change not for the better. We have prepared and discussed with colleagues in the Finance Ministry and the Central Bank forecast that comes from keeping the current situation in the $60/bbl., he already takes into account the incident on the domestic market changes, including inflationary growth, which has already become a two-digit and, in our view, will remain at these levels throughout 2015, reaching its highest values at the end of the first quarter. This means deeper slump and, of course, complicates the task of administration.
Whether the abolition of sanctions is a necessary condition to overcome the crisis?
– No. The sanctions regime is a complex matter. U.S. sanctions, in analogy with the amendment of Jackson-Vanik to last long. Otherwise probably with the European sanctions, which for the Europeans, unlike Americans, material. This gives reason to pause and seek mutual solutions. But the main thing is that the economy adapts to the sanctions regime through import substitution mechanisms. This will change the structure of the economy, will increase the surplus of the trade balance and current account, balance of payments, balancing the negative balance account of capital transactions. It simply means the transition of the economy in some other balance. It can be measured in terms of "better" or "worse", but it's still a balance that allows absolutely correctly.
– Here you are talking about -0,8% of GDP, the Central Bank said the possibility of a fall by 4.8% at $60/bbl...
– Of 0.8% is forecast, based on $80/bbl.
– What are the challenges?
Less [than the forecast of the Central Bank] will see. At a price of $60 will be other investments, demand and, of course, a greater decline than 0.8% [later Ulyukayev told reporters that the fall of GDP in 2015 under the scenario, oil prices at $60/bbl. may reach 3%]. But the forecast drop of almost 5% does not take into account the set of anti-crisis measures. They affect the dynamics of the stocks, the amount of credit in the economy, for working capital, etc. we have the ability to change these settings for the better.
– Where do you think the situation will arise most acutely?
– If we talk about the social dimension, the risk zones will not only towns but also metropolises, standards of consumption of the residents which is to be corrected. Unfortunately, there are risks deservedly successful regions, which were the leaders not at the expense of oil and gas.
– Falling real incomes of the population you estimate how much?
– In that scenario, which I mentioned and which now seems overly optimistic, a decrease of 3%.
Plan for extinguishing the fire
– There is a feeling that the government has no clear plan to overcome the crisis...
– Of course, the plan exists. It has already been adapted through the programs adopted by the Central Bank and the government. This is a known solution in the field of recapitalisation of the banking system. The experience of past crises, we know that the fastest the restrictions on the demand reacts financial and banking sector. In this sense, the need to solve at least three tasks – to ensure the liquidity of the banking system to provide liquidity in non-traditional form, namely in the currency, and to solve the problem of banks ' capitals. The latter is solved through two channels. The first is, for example, a temporary easing of regulations on capital adequacy ratios, clarification of the requirements for the establishment of reserves when the restructuring of Bank loans, which means less burden on capital. Second – the actual increase of capital of the banking system. The Federal Assembly adopted a law, according to which we give the banking system 1 trillion rubles in the form of Federal loan bonds through DIA. It needs in the short term to support the banks. Recently there was a discussion, this money can be accounted for only in the capital or the second capital of the first level. It was decided that they will be taken into account also in the capital of the first level subordinirovannyh through long-term loans or directly through entry into share capital. Several solutions deal with the mechanism of provision of foreign currency liquidity to the banking system. This is primarily currency refinancing through REPO operations or the refinancing of export credits. These measures should be supplemented with some other solutions that solve a similar task. For example, the use of funds of the NWF for additional capitalization of banks.
– While you talk only about support of the financial sector...
– The issue of providing liquidity to the most vulnerable sectors of the economy in the situation when the Central Bank key rate raised to 17%, through the possibility of obtaining large amounts of refinancing loans to small and medium enterprises. There is a special refinancing rate is 6.5%. Run the project financing mechanism. Establishment of a regulatory framework and there are already projects that, from our point of view, suitable for the use of the tool. I think in January we can first guarantee to provide. You must increase the budget safeguards and simplify the delivery mechanism by analogy with those in 2008 for the backbone enterprises of the real sector. So you as quickly as possible to issue a guarantee for a week.
– Do not turn it into a kind of lever manual control?
– I hope not and the rate at 17% – temporary. If we achieve a sustainable stabilization of the currency market, then it will be reduced. I'm sure this can be achieved in a relatively short time.
– VEB pull the toxic assets of strategic enterprises?
– We do not need to completely hang these debts on the web. In the last crisis was the instrument of provision of foreign currency refinancing through VEB, the Central Bank placed $50 billion on its deposits. But then we had no foreign currency refinancing as an institution. Now I have it.
– How much can cost a complete package of anti-crisis measures-2015?
– In the crisis of 2008-2009 was a direct increase in public expenditures amounting to about 700 billion rubles, plus the increase of state guarantees to 400-500 billion rubles, NWF – 250-300 billion, were funds of the Bank of Russia. What we have at the moment? 1 trillion rubles for capitalization of the banking system. The Bank of Russia may Sberbank capital increase. In accordance with the proposal of the Ministry of Finance budget limits are communicated to managers with a reduction of 10%, that is, in this part we see a decrease in expenditures, not an increase. But I believe that we need to increase the size of the budget guarantee, on a several hundred billion rubles.
Currency control won't work
– In reserve, at least to stabilize the situation on the currency market, you have currency controls...
– We are not discussing the possibility of introducing foreign exchange controls. In addition, it is difficult to administer. Another question that needs to be a balance in the currency market. It will be provided as soon as we prove that the mechanisms to support the banking system, skillful management of ruble liquidity, provide FX liquidity to work. We are going to prove to market participants that the conduct in which they remain in the form of short term monetary assets of their foreign exchange earnings, and themselves take on the domestic rouble market is irrational. At an early stage of this process is important to coordinate with participants, explaining the Central Bank and the government, why it is beneficial to exporters. At some point in time these verbal interventions will disappear.
– You now mean Shuvalov working group that monitors implementation of foreign currency earnings by exporters?
– It does not control sale of foreign currency. It's just a means of communication with holders of foreign currency assets. Explaining to them the situation.
We see from the middle of last week, the improvement of the situation on the currency market. This is due to the work of the group?
– Probably the communication with exporters, which was conducted by the President and the Prime Minister.
– Meanwhile for the largest state-owned companies have made an exception. They were instructed to March 1, to have the accounts of as much currency as it was on the first of October...
– Yes, it is. But this right of the state as owner of these companies. And as a regulator of the state in any case this should not require.
– What value you need to bring monetary assets of these companies by March 1?
– This is the value that knows the Bank of Russia, carefully monitor all balances.
– International rating agencies Moody's and s&P do not exclude the decline in the sovereign rating of Russia to "junk" level. Than it threatens the economy?
– The actions of the international rating agencies seem irrational. In this sense, an important additional clarification that the situation is manageable. There are real risks, especially in the foreign exchange market. But it seems to me that a distinctive feature of 2014-2015 from 2008 is the much greater stability of the budget system. The effect of a floating exchange rate allows to automatically balance the ruble budget revenues with deteriorating market conditions export of goods. Short-term external debt of the business less than then. I hope a decision will be made not to reduce the investment rating of Russia.
But if it were to be adopted...
– Of course, it will have negative consequences. Investment companies and funds will change its policy regarding the storage in their portfolios of assets associated with the Russian economy. A number of agreements on loans and bonds covenants are embedded, which in the case of investment rating downgrade possible claim to maturity earlier than the original schedule of payments. The situation is unpleasant, but we understand the potential scale of the disaster. The total value of corporate debt – about $670 billion, it seriously declined in 2014. Now corporate external debt below 35% of GDP. It is a comfortable situation. Short term debt is much less than it was in 2008, comfortable enough and the payment schedule. No reason to resort to extravagant measures not.
Need to restore the trust
– Of all the things about which we speak, emerges a tactical plan of action. But I have a feeling that behind all this lies the absence of a strategic plan for the development of liberal, mobilization, what else? Many were waiting for clarification from the President in address to the Federal Assembly, hoping for word of a liberal turn, but this did not happen...
– You say that manual control is bad, and you expect that you will have the manual controls. What will the President and say: "Die erste Kolonne marschiert, zweite Kolonne marschiert die". Agree that it is wrong. I think he gave a clear pass to the government, declaring a moratorium on changing tax environment, risk-based inspections, reduction of administrative pressure on small and medium businesses, the Amnesty of capital. What I agree with is the fact that our actions are largely reactive. Changed the situation on the currency market – we did that, the covenants will work – so will do, the price has gone down – so will react. We, unfortunately, proactive policies are not.
– When will a clear proactive policy?
– Will try in the near future. As for the terms – mobilization or liberal it should be... I believe that mobilization agenda broken. Work only standard measures, which we, unfortunately, are talking more than we realize, on creation of comfortable conditions for business, to ensure balance in the currency and financial markets.
– Is it possible to achieve economic growth of 3%, mentioned by the President in his address?
The President said that at this level need to leave after two years. We have to base the forecast was laid growth of 2.3% in 2016 and 3% in 2017. Now these figures have, of course, correct, but I still think it's real. Our potential output is about 2.5–3%. It is possible without any breakthroughs on the legislative framework or the liberal revolution.
– Previously, when talking about measures of liberalization of the economy, spoke about the privatization of state property...
– The whole privatization plan for 2015 – about 160 billion roubles planned in the budget. The risk that this amount will not be received, of course there is, but agree that it's a small amount.
– Privatization of "Bashneft"?
It is too early to talk about the terms of the plan, but fundamentally we believe that this asset should be included in the privatization plan. When this happens, it is difficult to say, the state has not really entered their property rights from the point of view of participation in the Board of Directors, elaboration of balance sheets, business plan, etc.
'Are you coming to the forum in Davos?
– I will speak about the need to restore trade and investment relations. But for me it is important to not only hear from the stands. The emphasis I make in bilateral meetings. I would – with representatives of governments and business. Trust needs to return is the most important.
Dmitry Koptyubenko, Petr Netreba, Jeanne Nemcova
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