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Thursday, June 29, 2017

When you die the ruble

The Federal reserve decided not to raise the rate at which credited the banks and the real sector. This means that traders are not yet will rush to transfer their assets from oil and gold in the green paper. That is one risk factor for raw material prices was less. This is a good sign for the ruble.

However, Federal reserve chair Janet Yellen warned in December, the rate will still be raised. Simultaneously held a closed meeting with Russian Prime Minister Medvedev on the new forecasts of economic development of Russia. Reported data was if not frightening, alarming: the rate of growth of GDP in the next three years will be markedly slower than expected in April, while inflation will be higher.

“MK” has decided to ask the experts: what will happen to the ruble and purchasing power in the near future, especially after the fed’s decision in December?

photo: Natalia Muslinkina

But first a few words about the closed meeting with Medvedev. According to the latest government plans, we need to prepare for the fact that budget expenditures in the next three years will not grow. They will lock in the current year — over 15.8 trillion. Adjusted for inflation, this means that the real costs of the country will only decrease. Such stagnation was not the last 20 years.

Worse, the budget revenues will be below costs. In 2017 — as much as 3.5 trillion. To patch this hole, will have to squander a Reserve Fund to dip into the national welfare Fund, but this will not be enough. To make ends meet will have to accelerate the privatization of large state-owned enterprises and to begin again to take abroad. But who will give us a loan because of the sanctions?..

Notice that this is not the worst scenario. It is based on the assumption that oil will cost $40 per barrel or higher. How tight we have to tighten the belt in case of its falling to $25-30 — at the meeting of the government was discussed, but we are not told.

— About the plans of the US Federal reserve so far, whatever said his teacher, — told “MK” the first rector of the Financial University under the Government of Russia Konstantin SIMONOV. — Of course, the rate increase will mean a strengthening of the dollar is pushing oil prices down, no matter what we did, as we agreed on production cuts with the Saudis and Iranians. But the fed still do not know what will be their policy with the new President of the United States. This policy will depend on who will be the owner of the White house, and it’s not obvious.

As for the plans of our government, they are also very much will depend on the dollar exchange rate and oil prices. If the volatility in the hydrocarbon market continues, and Moscow White house, will rush after her.

Personally, I assume that will be an optimistic scenario: oil will fluctuate around $45-50 a barrel, and it should not lead to serious collapse of the ruble. But to expect the holiday of a lifetime in Russia is not necessary. Life force to adjust to budget restrictions. Although, frankly speaking, our country has still not learned to live within our means. Even at $50 we have a budget doesn’t add up. This is the main problem, not the exchange rate.

So my medium term Outlook is that if the government learns to live within its means, then he will have to go into debt and to resort to the issue that will disperse rates and to devalue the ruble — or even just to bring down, to kill him.

A different point of view regarding the issue and the fate of the ruble holds the doctor of economic Sciences, former Minister of labor and social development Oksana DMITRIEV:

— Fed rate hike is even on the whole half a percent of the idea should not in any way affect the well-being of Russians, if our government will behave correctly. The rouble depends on many factors, not just from the fed rate. He is much more dependent on the policy of the Central Bank of Russia.

With regard to the purchasing power of Russians, the current policy of the government, and even in these the results of the ruling party in the elections, of course, she will fall. If salaries are frozen, and prices are still rising, what can be your purchasing power? There is an economic downturn. Reduced consumption — reduced.

I think that the way out of the crisis is to do the opposite: indexing cash incomes to stimulate effective demand; to lower taxes to stimulate business activity. And to save on various Bank fraud. And then no … we will not be afraid.

Experts can argue endlessly, but the main problem of our economy is lack of investment. But they are not because no one knows what will be the ruble. It’s not even in the absolute numbers (even 100, even 200), and that they were predictable. That is why the Russian Government and trying to convince everyone lately that the ruble in the next three years will be stable. The same as today. But are these assurances verbal intervention or a real possibility — time will tell.

Rising prices and a falling ruble. Chronicle of events

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