Good morning,
Welcome to the subjective list of top 10 News from Russia. 1 of the better ones I've been able to prepare, but possibly point 7. But the remainder of the prima item.. present no. 1 are again ruble problems, but it will be about budget cuts, despite the surplus in June and threatening to rise bank rates despite low inflation and food deflation. It's yet Russia, a land of unlimited opportunity.
Place 10 – Moscow's next promises
In August Russia will voluntarily reduce production by another 500,000 barrels of oil According to Deputy Prime Minister Alexander Nowak, the additional simplification in Russian exports under Moscow agreements with OPEC+ partners will thus exceed 1 million barrels per day (lol). Saudi Arabia and another members of the alliance reduce production by more than 1 million barrels. specified efforts are aimed at stopping oil price cuts from fearing the hazard of further oil price collapse.
Half a million barrels are about the size of Russian "black gold" supplies to the planet market. At the beginning of this year, Moscow declared to voluntarily reduce regular oil production by 500,000 barrels. The targets Moscow intends to accomplish by reducing production are rather obvious. Energy officials are thus trying to keep the cost of hydrocarbons at least at the current level in order to prevent a continuation of the decline in gross from exports of natural materials to the State. From January to May 2023, the budget gross from the oil and gas manufacture fell to 2.8 trillion rubles, which is 50% little than last year.
However, many experts point out that Russia is failing to keep its declarations and that a simplification in production may one more time concern the oil needed for fuel refining.
Place 9 – Miracles of the Russian Ministry of Finance
The national budget deficit in the first half of 2023 was 2, 595 trillion rubles, due to the preliminary evaluation of the implementation of the national budget for the period January-June 2023, published by the Ministry of Finance. Compared to the department's preliminary figures at the end of May, the deficit for June decreased by 816 billion rubles, meaning the budget reached a evidence surplus in June.
The current budget law sets the deficit for the full 2023 at 2.93 trillion rubles, or 2% of GDP. So right now the deficit is part of the plan. We can anticipate the deficit to decrease miraculously by the end of the year.
Budgetary gross in June 2023 amounted to 2.56 trillion rubles, i.e. 29.8% more than the gross from June the erstwhile year (1.97 trillion rubles), which means that off-raw revenues had to increase over 40%.
According to the Ministry of Finance. expenditures are falling very rapidly which were lower by 16% than in the same period in 2022 (1.75 trillion rubles versus 2.08 trillion).
The gross of the non-oil and gas national budget increased by 18% annually and reached 9 trillion rubles. for the first half of the year comes from the data of the Ministry of Finance. In particular, full VAT gross increased by 17% (to 5.3 trillion rubles). According to the operational data of the Ministry of Finance at 28 June, the national VAT for the period from the beginning of the year only brought 2% more than in the same period in 2022, But VAT on imports of goods increased by 24%.
How specified miracles are possible I will explain on the nearest live, although many readers already guess.
Place 8 – Russia nobody wants to borrow money
In 2022, the Ministry of Finance could not borrow from global organisations and pay their debts to them in full," the Chamber of Auditors informed. There were besides problems with paying off debts to Korea.
According to the Ministry of Finance referred to by the auditors, it was virtually impossible for Russia to attract unrelated loans due to sanctions. The acquisition of loans for the projects took place, but turned out to be very difficult.
"In 2022, the actual volume of MFI loans collected for 4 projects amounted to US$35.2 million, or 2.79 billion rubles (3% on a dollar basis and 3.4% in the ruble of the planned indicator)," says the summary.
According to the Ministry of Finance referred to by the auditors, it was virtually impossible for Russia to take out loans due to sanctions.
According to Alexey Wiedevov, manager of the Center for Structural Studies at the Russian Academy of National Economy and Public Administration, the suspension of projects involving global organisations will have a "not critical but powerfully negative impact" in the Russian economy.
"By 2022, we were building relations based on the fact that we are raising funds for various large projects and, of course, if we halt doing this, then the deduction from possible growth that should be replaced in any way. However, this is not always possible: the National Prosperity Fund is not rubber, and generally, the budget is not adequate "- concludes Vedev.
Place 7 – Most beautiful Moscow female chosen
The capital of Russia yesterday met the name of the fresh Miss Moscow. In 2023 this title was won by 25-year-old Angelina Brezhenskaya.
Brezhenskaya works as a tv presenter and professional model and already has experience in beauty contests. In 2020, she received the title "Miss Saratov", and later reached the final of the competition "Beauty of Russia". In the fight for the crown, the title and the right to represent the capital at the next “Beauty of Russia” competition, which will be held this autumn in Sochi, the girl missed 32 rivals. Interestingly, this year the organizational committee cancelled the intellectual competition.
The winner is not very active on her Instagram. With almost 400,000 subscribers, only 24 publications are available on the website. In recorded stories you can see the movie footage of her many trips to Italy, Courchevel, Dubai, Seychelles and the island of Mykonos.
I personally am not a supporter of specified competitions, but in Russia they are inactive very popular.
Place 6 – GDP growth is coming ?
According to Russia's first GDP estimation for the first 4th of 2023, the final consumption expenditure of the general government during that period increased by 13.5% compared to the same period of the erstwhile year, which is simply a evidence for the full availability period of the applicable statistic since 1996, results from the statistical service materials posted on 5 July. As a result, government spending accounted for as much as 24.1% of GDP, compared to only 17.1% in the first 4th of 2022.
State final consumption expenditure for the first 4th of 2023 Rosstat estimates 8.88 trillion rubles at current prices (in the first 4th of 2022 – 6.3 trillion rubles).
In March 2022, In the context of difficulties with sanctions in the economy, the government allowed public procurement participants, including state defence contracts, to receive an advance of up to 90% of the contract price alternatively of regular 30%. For 2023, the government provided an advance of up to 50% of the price against 30% earlier. "The increase in the amount of advance payments will give organisations access to additional resources, aid them to solve tasks more rapidly and efficiently, while ensuring unconditional control of budgetary expenditure" (but as if, as in what kind of control), the government explained. Companies with government contracts in fresh regions can always receive up to 90% of the price as an advance.
At the same time, household consumption expenditure in the first 4th of 2023 decreased by 0.1% on an yearly basis. "The final consumption of households fell by 0.1% as a consequence of a decrease in population request mainly for non-food products", comments Rosstat. This GDP component shows a drop in the 4th fourth in a row (a 4th before that was minus 2.4%).
Overall GDP in the first 4th of 2023 decreased by 1.8% compared to the same period of the erstwhile year (according to first estimates published in May it was minus 1.9%).
In the face of specified evidence transfers to the defence manufacture and to fresh areas in my opinion, we will see GDP growth in the 2nd or 3rd quarter. Tanks and cannons produced must yet start to number increasingly to Russian GDP.
And so we will witness another Russian miracle under sanctions.
Place 5 – Declining dividends for abroad companies
The amount of dividends paid from business in Russia to abroad companies decreased by almost 2 trillion rubles. In 2021 this amount reached 2, 944 trillion rubles and in 2022 it was already 1 trillion , according to data from the national taxation Service . If we are talking about different countries, the biggest simplification in payments has been made to Cyprus investors from 618 billion to 210 billion rubles, from the United States – from 607 billion to 416 billion rubles, to the Dutch, the UK, Germany, Switzerland – the amount of dividends has fallen by about half.
The main reason for reducing the size of dividends for abroad companies was sanctions against Russia and retaliatory measures, so the Russian experts say (not to be confused with Russian fans surviving in Poland).
The downward dynamics of dividends may besides be linked to one-off factors, for example the decision of companies not to pay dividends, says Timur Nigmatulin, an investment consultant at FG Finam. The payment of dividends may be influenced by mediocre profit rates of companies, including due to the force of sanctions, added Alexander Tsyganov, manager of the investment and corporate business department at Tsifra Broker.
In 2022, many Russian companies refused to pay dividends. Gazprom refused any of the withdrawals. NLMK and MMK metallurgians, companies operating in Russia but registered abroad, X5 Retail Group, TCS Group (main asset Tinkoff Bank), Polymetal, Headhunter, Veon, Fix Price and others did not pay dividends.
Place 4 – Hungary without Russian gas in 2024 ?
According to Gazprom head Alexey Miller, Russia will impose sanctions on Ukrainian Naftohaz in the event of further actions by Ukrainian concern.
The “Unfair Actions” should be understood as the arbitration proceedings of Kiev with the Russian monopolist, to whom the Hague court ordered Naftohaz to pay compensation of USD 5 billion for Crimean natural materials lost in 2014 :-).
Of course, Moscow does not intend to pay for final court decisions, so Kiev intends to confiscate and sale Gazprom's assets worldwide to cover damage.
If appropriate judicial decisions are made, the property seized may go under the hammer. specified judgments have not yet been announced, but they should be announced in the US and EU any day now.
In 2024, the contract between Russia and Ukraine for the transit of gas ends. The extension of the agreement has not yet been discussed and there is no indication that specified talks will take place. EU countries in Hungary are surely curious in transit. If no agreement had been reached, another gas pipeline to Europe from Russia would have been scrapped and Austria or Hungary would have been threatened by a gas blackout.
Place 3 —Banka on the credit market
The Russians are inactive in debt, despite the insistent attempts of the Central Bank to cool down this gigantic hot market. Only in June, banks granted over 4.5 million loans to individual customers worth 1.47 trillion rubles – this is an absolute evidence for the country, and the volume of loans updates the maximum of the second period in a row. At the same time, various types of risks are expanding – both for borrowers and for the banking system.
In average reality, the growth origin for the economy is positive: it shows its development. But under the present conditions, Russia is simply a serious hazard factor. We do not see growth in the economy, it is the same with the incomes of the population – in real terms it does not grow.
Consequently, people take loans with 2 main objectives: to keep a falling standard of surviving at all costs or to refinance previously incurred debts. specified a situation is burdened with inflating the financial bubble on the credit market, with the hazard of its further loud "breakdown".
The full amount of Russian debts (the full number of debtors over 12 million people) amounted to 30 trillion rubles on 2 May, while the figure had reached 27.8 trillion a period earlier. In the case of mortgage loans , citizens owed banks over 15 trillion rubles and the amount of “delay” (unpaid interest over 90 days) increased by 4.3% in the first 4th . And let us besides callback in late 2022 the volume of expired (lost) bank loans for individuals, excluding mortgage loans, increased by 16% (plus 139.5 billion) to 1,017 trillion rubles.
"Motivating citizens to save, to long-term stockpiling, weakens and it is through loans they are trying to solve their problems," says Nikita Maslennikov, a leading expert at the Centre for Political Technology. – Inflation and inflation expectations decreased importantly in the first 4th (today they have been at the lowest level for 25 months), which accelerated consumer demand. At the same time, the level of maximum public debt is alarming: about 44% of loans are granted by banks to people who spend 80% of their income on their services. The marketplace is truly overheated, of course. And there is simply a hazard for both borrowers and banks. erstwhile the “delay” becomes bigger, the second must increase the standards of the required reserves, which guarantee compliance with their obligations to customers. At the same time, profits are falling.
And there is simply a devaluation of the ruble, and with specified a hot market, an increase in interest rates can consequence in serious problems for borrowers.
The Ministry of Finance is ready to take super extremist measures, cutting costs. We are talking about a forced simplification of 10% of budget expenditure on alleged unsecured items which are not linked to gathering social obligations. And here are 2 conclusions: the first is that the situation with filling the vault is truly wrong, if not critical. Secondly, this step could mean a permanent return to a practice to which the Russian monetary authorities had resorted before only as a last resort.
At the fresh budget committee meeting, Finance Minister Anton Siluanov presented a programme of "frontal reduction" of government spending in the budget for 2024, justifying this powerful formulation of the increasing gap between gross and expenditure. According to sources akin to the government, the participants reacted to it mildly to say negative. However, they did not propose any alternatives, in line with the general thought – costs should be optimised. The key question is, what exactly?
The paper expects spending for the following year of 29, 4 trillion rubles. In fact, they'll be bigger. This year, compared to the budget bill, this amount has already increased by 1 trillion rubles, and by the end of the year this gap with the planned parameters will increase even more.
It should besides be noted that there is no division of fiscal expenditure into protected and unprotected at legislative level. As a rule, the erstwhile are understood as social obligations: pensions, benefits, salaries for public workers. Theoretically, expenditure on social policy, wellness care, education, public debt (cuts are insolvent) and transfers to regions of 12.9 trillion rubles can besides be included.
All of these definitions are very arbitrary and can only be speculated which circumstantial articles fall within the word ‘protected’. It would be more correct to say – at the discretion of the State. There is no uncertainty about 1 thing – the sequestration will not affect national defence spending and the safety of the state, a full of 9 trillion rubles are foreseen.
An alternate proposal was made at the gathering of the budgetary committee with the participation of Mr Siluanov – expanding the volume of loans to the budget. But the Central Bank typical opposed it. In the case of granting loans to the public sector, commercial companies will be more hard to get loans and the economy will completely collapse," he argued.
"According to the results of the first half of the year, there is no affirmative dynamics of the budget deficit, which reminds us of the reality of the 1990s," says Andrea Loboda, economist and communications manager at BitRiver. “At that time, the Russians became more acquainted with the concept of “severage” – this is simply a simplification or simplification of the state spending.
The rubla course remains a key problem: giving up a position against the dollar by 10% can velocity up inflation by 15% and make it hard for you to solve many problems.
And there's the problem with the credit bubble. The russian Russian power is not easy to do.
Place 1 – Interventions on Rublu
One of the most stormy weeks in the currency marketplace was marked by a sharp fall in ruble and central bank interventions . Now the exchange rate is below 92 per dollar and above 100 per euro. Will the ruble stabilize at around these levels next week? And if not, will stock marketplace speculators proceed to play briefly? In general, the authorities have tools to remedy this situation. Thus, for example, the regulator can sharply rise the key rate, and currency interventions on the stock exchange can besides continue, as late mentioned by the head of the Bank of Russia Elvira Nabiullin. Meanwhile, Russian economists inform that the usage of specified a financial instrument as abroad exchange interventions carries a advanced risk: the support of ruble will be short-term and may not give anything. In addition, it is certain that inflation will importantly accelerate.
However, let us give them the level so as not to be accused of bias in the description of the situation.
Dmitry Babin, stock expert at BCS planet of Investments:
‘To stabilise the situation, the Central Bank may hotel to selling abroad currency in the abroad currency marketplace only at the expense of large abroad reserves. In the short term, monetary interventions of the Central Bank can be rather an effective tool. First of all, as a means against excessive emotionality in the actions of a large number of Russians who rush to buy currency, seeing how her ratings go up. With the forced closure of short positions, it creates this self-propelled effect, which dramatically speeds up the depreciation of the ruble.
However, we request to be aware that the fundamental factors that caused the permanent weakening of the ruble do not disappear. First of all, this is the volume of export gross which decreased due to comparatively low oil and gas prices. As a result, a abroad currency entering the country is not adequate to conveniently guarantee the regained imports without a crucial weakening of the ruble. Therefore, monetary interventions will not be able to importantly and sustainably strengthen the ruble until key external and interior conditions change.
Ivan Samoilenko, Managing Partner of B&C Agency:
‘PIf there is specified a rate of increase in the value of the dollar and the euro, as it is now, the intervention itself may not be adequate – there may simply not be adequate abroad exchange reserves. Finally, dollars and euro are not delivered to Russia due to sanctions, the currency available is the consequence of abroad trade operations and business work with partners abroad. 1 currency shortage is 1 of the reasons for the dollar increase in fresh days. Therefore, the main danger of monetary intervention is that the reserves are not adequate for strong currency depreciation. These are needed for the stableness of the country's financial strategy and complement the liquidity of banks. At the same time, the usage of monetary intervention does not warrant a certain level of strengthening of the ruble.
Guzel Protsenko, CEO of Alfa-Forex:
"The abroad exchange interventions carry pro-inflation risks, which evidently do not correspond to the central bank's main monetary policies. Moreover, this is simply a temporary solution that can aid hold the fall in the ruble but does not warrant long-term exchange rate stability. In order to accomplish a sustained reinforcement of the ruble, a qualitative change of another basic factors is needed.
Artem Deev, Analyst Department Manager, AMarkets:
"The financial intervention of the Central Bank, of course, can only be an effective measurement in the short term. This will strengthen the ruble, rise its rate against the conventional dollar/euro currency pair.
It predicts a sharp leap in euro to 150-170 rubles, followed by stabilisation. By then, the situation will be critical and decisive measures will be needed. To avoid specified a risk, the Central Bank should rise the chief interest rate from the current 7.5% to 8.5%. In addition , budget expenditure needs to be cut by 10% . All of this together, in my opinion, will slow down the rising rate of inflation and reduce the risks to the country's economy.
And next week, we'll see your illustration again.
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