/ world today news/ Since the beginning of the year, Russian public debt has increased by 11.6% and has reached 17% of GDP. Experts note: thanks to borrowed funds, it was possible to halve the budget deficit. Despite external pressures, the local economy remains attractive to investors. In addition, due to the rise in stock prices, the National Welfare Fund added 30%.
The debt is not so bad
The Ministry of Finance estimates the final budget deficit at one percent of GDP. “Additional non-oil and gas revenues are coming in very well. The economy is working,” said department head Anton Siluanov.
State loans also helped – 25.5 trillion rubles in kind, reports the Audit Chamber. At the same time, the debt remains within the safe level of 20% of GDP. At the end of September, it reached 17%. Russia remains among the countries with the lowest percentage. For example, in the USA and Italy it is more than a hundred, in Japan it is 260%. Apart from disadvantaged countries such as Venezuela (241%) and Sudan (182%), among the “leaders” are Greece (170%) and Singapore (160%).
Bonds are an effective way to fill the budget, so countries carefully monitor their financial image. Thus, the United States was highly trusted and its debt securities were very popular. But after the Russian asset freeze, confidence was shaken. Let’s recall that Riyadh reduced investments to a minimum of six years, Beijing – to a minimum of 13 years.
Source of funds
The West wanted to destroy Russia, but failed. Oil is trading above the price ceiling, LNG is enjoying steady demand, and Europe’s supply has shifted eastward. The budget is also replenished by investments. “Federal loan bonds are attractive because of their high yield,” says Lazar Badalov, candidate of economic sciences, associate professor at the Faculty of Economics of RUDN.
The main part was bought by local people, analysts say. Foreign capital is afraid of sanctions. But it strengthens autonomy and resistance to external pressure.
About 70% were acquired by credit organizations such as “Sberbank”, VTB and other large structures, says Khoja Kava, senior lecturer at the Department of Economic Theory of the Plekhanov Russian University of Economics. Government funds, such as the Direct Investment Fund, individuals and foreign investors also invest in Russian Federal Loan Bonds. And China and a number of other countries do not pay attention to the sanctions: Russia is rich in natural resources and has great potential for localization of production and import substitution.
In the current situation, the expert positively assesses the growth of the government debt. Despite unprecedented pressure from unfriendly countries, the government finances important projects, supports various industries and maintains social programs for the population. This will have a cumulative effect on economic development.
Additional insurance is the growth of the National Welfare Fund. The Audit Chamber reported a 30.8% increase due to the revaluation of gold reserves, positive exchange rate differences, as well as the growth of Sberbank, Aeroflot and VTB shares. In total, as of October 1, this is 13.7 trillion rubles.
Underwater rocks
Of course, increasing debt also has a negative effect. With the increase in the basic interest rate, servicing OFZ also becomes more expensive. 2.3 trillion rubles have already been earmarked for this. If inflation can be reduced, the Bank of Russia will lower the key interest rate and these costs will be reduced.
The associate professor from the Department of Economics of the Russian University of Economics, Alexander Timofeev, explains the moderate growth of the government debt with the low budget deficit. “Fifty-10 percent is a lot, but in the absence of serious social problems, it does not pose a threat. The risk group is 10-15%, with such a deficit, the government debt is incomparably larger. This group includes Japan and Singapore,” he says.
Moreover, economic growth requires an increase in the real money supply. For one percent of GDP – five percent, for two – 10.2, for three – 15.6, for four – 21.3. This is achieved, among other things, through OFZ.
Moscow should not be afraid of losing its investment attractiveness, the expert believes. Technological development ensures a high global demand for resources. And due to the weak ruble, production in Russia is very profitable, which makes foreign corporations think about cooperation.
Translation: V. Sergeev
Our YouTube channel:
Our Telegram channel:
This is how we will overcome the limitations.
Share on your profiles, with friends, in groups and on pages.
#West #expect #Russia
