Thursday, October 2, 2014

Russia Calling China – BBC

Russia Calling China – BBC

Vladimir Putin on the forum “Russia Calling” admitted that inflation in 2014 will be higher than planned, assured that Russia will support the ruble and had fallen under the sanction companies and named China the most promising partner.

In anticipation of the head of state in the hall forum “Russia Calling” was a substantive discussion on the origins of the current crisis in Russia. The head of VTB Andrey Kostin, President of Sberbank German Gref, Chairman of the Central Nabiullina, Finance Minister Anton Siluanov and Economic Development Minister Alexei Ulyukayev, located on the scene, they reasoned, what to do.
«Time to make key decisions have probably already gone!” – suddenly declared Uljukaev.

German Gref was set off into a discussion of structural reforms, but quickly returned to earth, and said that not ready to return to the scoop: abandon internet banking, for example, or to stand in line at the store or in a savings bank.

To the Soviet era did not come back, you need to “radically improve the quality of governance,” said the head of Sberbank.

«We unimaginable costs of the quality of public administration. In this gigantic mill no matter how Give grain, flour does not get it. Five trillion over five years allocated to federal programs and what we have achieved? “- Outraged Gref.

All good

Shortly thereafter came on stage and began to Vladimir Putin psychotherapy.

Many global companies, no matter what the circumstances are increasing investments in various sectors of the Russian economy, Putin said at the outset.

However, the conditions for investment become harder recognized head of state, but it is not an obstacle but an incentive for more efficient work.

The Russian government, for its part, is doing everything to investors to feel comfortable in Russia, says Putin: budget surplus, taxes do not grow, monetary inflation is kept within the forecast, the restrictions on the movement of capital does not enter Russia. “We sincerely want to create a prosperous country!” – Assured the President of Russia.

True talking about inflation, Vladimir Putin had to admit unpleasant truth. “With regard to inflation, then by the end of the year it will be about 7.5-7.6 – about 8% – that, indeed, higher than last year. In 2013, it was 6.5%, “- said the head of state.

According to Putin, the acceleration of inflation linked” with a grocery basket and with our actions to restrict imports from partner countries. ” “But I am convinced that it is only temporary,” – again made a note of optimism president.

«Of course, antitrust service should look for biased tendencies associated with speculation in the market”, – said Putin.

In this case, Russia remains an attractive country for investment, said the head of state. In particular, because of the mild taxation.

«I want to emphasize that, despite the difficulties, we did not strengthen the tax burden on business, – said Vladimir Putin. – You know, we did not hide these discussions in the leadership of the country, in the government, but we have not gone down this path, the path of increasing the tax burden, and have no plans to introduce any foreign exchange restrictions or restrictions on the movement of capital ».

«The update of the economy and infrastructure, we intend to use as their own financial resources and sources, and strengthen cooperation with investment funds, banks from other countries” – called the president of Russia.

Vladimir Putin has made no secret of exactly what the state has in mind – this is China. “We’re not going to fold our relations with traditional partners in Europe, – assured the President, noting that trade between Russia and the EU countries is $ 430 billion. – This is the reality of today, but we must look to the future».

Chief Executive Officer of the Chinese telecommunications equipment maker Huawei Technologies Zhou Wang Meng in response to Putin assured the participants of the forum and that her company will continue to increase investment in Russia.

The Director of the Institute of Strategic Analysis Igor Nikolaev took Vladimir Putin’s statement skeptical. “It’s quite crafty rating – says the expert statements by the President with respect to inflation. – Forecasts of inflation have often been revised ».

Nikolayev recalls that the budget was laid target of 4.8%. “If we compare these figures and 7.5-8%, which we now predict, we get a blatant failure to the inflation outlook,” – he said.

Russia’s attempt to make a turn to the East to hit a cautious attitude of potential partners, be sure to Nikolaev. “You have to put yourself in the position of a Chinese – how they will apply to the partner, who first befriended podruzhil-, and then said that he was leaving to others, – says the analyst. – Where is the guarantee that the Russian government will not go away over time from Asia to Africa? Therefore, our assessment that we can only grow at the expense of Asia, are still only our dreams ».

« Now is the authorities have a unique opportunity to blame all the problems in the economy to external factors “- sums up Nikolaev. The situation, he predicted, will continue to deteriorate: sanctions and falling oil prices will have a negative effect on the economy. “We forecast that next year we will have a recession, and 2% of GDP is a still, at best,” – said the expert.



Finance sing

However, some specific measures to remedy the situation in the Russian economy is still being made. So, at the forum were finally announced measures to overcome the shortage of liquidity in the financial market. As expected professional market participants, the Central Bank officially announced the introduction of the mechanism of “currency repos” (receiving banks cash in the currency of the Central Bank against securities).

«We are planning a few weeks enter currency REPO 7 and 28 days, we believe that it will help our businesses and banks to deal with the problems that are associated with the closure of foreign markets “, – said the head of the Central Bank Nabiullina.

But According to her, these tool CBA is not limited to plans. “We need the flexibility of tools, we recently decided to introduce short-currency swaps. Amid rumors about the introduction of restrictions on the movement of capital, unfounded rumors, one-day currency swap load “- she said.

Much more surprising for the participants turned finrynka statement Alexei Ulyukayev: soon the banks will be able to get long-term money (up to 10 years) to finance projects worth up to 20 billion rubles.

It is expected that banks will receive funding under the formula “key rate minus 1%,” the final borrowers will receive credits under a “key rate plus 1%.” This will involve mechanisms of state guarantees in the amount of 25% of the cost of the current project.

Bankers with whom the news failed to discuss “the Newspaper” restrained rejoice. In the absence of criteria are, however, not be taken to suggest what kind of projects will be supported.

On the other hand, the rate of 2%, which is to get the bank covers the market risk but not in all cases cover the risk that the counterparty, and the state guarantees in the amount of 25% do not solve this problem, according to a top manager of one of the banks.

For example, when the target lending Far North in 1995 the banks were able to get at best 50% of the issued money, while the Ministry of Finance received back 100% of the given money so that credit institutions have recorded losses.

«We see that the state takes place in the direction of the bank and client sectors. The idea ( project financing – “Times» ) is good, but there is a question of implementation: it’s unclear what kind of projects under this funding will fall. Will fund projects daughters “Rostelecom”, or support and OOO “Daisy”, which is building a hotel in the center of Grozny, for example – they are two different stories in terms of risks. The amount allocated for this purpose has not yet announced, but most likely, small and medium-sized banks will remain on the sidelines, and substantive funding will receive state-owned banks, “- said the head of treasury Svyazbank Cyril Zverzhansky.

However, bankers sure that sounded liquidity support measures will be sufficient, if the Central Bank will continue to provide money to banks secured loan portfolio.

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