INTERVIEW: “The weekend’s protests were the Russian people's, not the opposition’s” – Maxim Reznik
Western Balkans citizens legally resident in EU equal to 14% of region’s population
International Ice Hockey Federation (IIHF) has stripped Belarus of the right to hold the World Championship this year
Alexei Navalny arrested on arrival as he returns home
@russian_market sacked by UBS for supporting Navalny
Elbrus Capital attracts major international players to invest in the Russian digital sphere
Russian President Vladimir Putin and US President Joe Biden have first phone call, extend START II treaty for five years
ING: Russian budget’s modest deficit leaves fiscal room for 2021
Public support is collapsing for The People’s Servant Party
Ukraine’s industrial output jumped 4.8% y/y in December
State-owned Ukrgasbank signs off on convertible €30mn IFC loan ahead of its privatisation
National Bank of Ukraine retains a key policy rate at 6%, the outlook of the CPI deteriorates
Estonia's two big parties agree on grand coalition
VISEGRAD BLOG: Central Europe's populists need a new strategy for Biden
LONG READ: The oligarch problem
OUTLOOK 2021 Lithuania
Czech billionaire Kellner´s PPF makes another bid for Moneta Money Bank
Czech MPs pass protectionist food law in violation of EU rules
M&A in Central and Eastern Europe fell 16% in value in 2020, says CMS report
Hungarian vehicle makers hit by supply chain shortage
COVID-19 and Trump’s indifference helped human rights abusers in 2020
Polish parcel locker operator InPost soars in Euronext Amsterdam debut
Polish industrial production continues boom in December
OUTLOOK 2021 Poland
OUTLOOK 2021 Slovakia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
FDI inflows to CEE down 58% in 1H20 but rebound expected
BALKAN BLOG: Only better waste management can clean rivers of trash
Pandemic pushes public debt close to 80% of GDP in Albania and Montenegro
BALKAN BLOG: Superstition and resentment surround vaccination plans
Albania needs reforms for e-commerce to thrive, says World Bank
Bosnia's exports in 2020 amounted to BAM10.5bn, trade deficit to BAM6.3bn
Bulgaria’s latest nuclear u-turn
Retailers and restaurant owners threaten protests in Bulgaria if reopening is delayed
Bulgaria's Biodit first company to IPO on new BEAM market
Spring lockdown caused spike in online transactions in Croatia
ING: Growth in the Balkans: from zero to hero again?
Labour demand down 28% y/y in Croatia in 2020
Kosovo’s biggest opposition party risks being unable to run in general election
OUTLOOK 2021 Moldova
Storming parliaments: New Europe's greatest hits
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Montenegro’s special prosecution probes finance minister over €750mn Eurobond issue
North Macedonia’s state-owned loss-makers await new owners
North Macedonia plans to cut personal income tax in IT sector to zero in 2023
Romanian cybersecurity company Safetech floats shares amid rising investor interest
Romania government to pursue “ambitious” timetable for justice reforms
Private finance mobilised by development banks up 9% to $175bn in 2019
EBRD and WBIF support fast broadband in rural Serbia
Slovenia plans region's longest-tenor Eurobond
Slovenian crypto payment system enters Thai market
Slovenia’s economic sentiment indicator up 2.2 pp m/m in January
Slovenia lost €10bn by neglecting wood industry for decades
D’S Damat franchise deals ‘show Turkey’s hard-pressed mall operators becoming their own tenants’
Turkey’s benchmark rate held as concerns over faltering recovery come to fore
Turkish lira breaches HSBC’s stop-loss, Turkey ETF signalling outflows
Following war with Armenia, Azerbaijan gains control of lucrative gold mines
CAUCASUS BLOG : What can Biden offer the Caucasus and Stans, all but forgotten about by Trump?
Armenia ‘to extend life of its 1970s Metsamor nuclear power plant after 2026’
OUTLOOK 2021 Azerbaijan
OUTLOOK 2021 Georgia
“Try me” not telecoms minister Iran’s president tells hardliners in internet row
Iran’s President Khamenei menaces private citizen Trump
Iran’s technology minister indicted for failing to properly implement internet censorship
No US move to rejoin Iran nuclear deal imminent, say Biden national security nominees
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
COMMENT: Mongolia is an island of democracy
OUTLOOK 2021 Mongolia
Mongolia's PM quits amid protests over treatment of mother with coronavirus and newborn baby
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
Tajikistan: Writing for the president is on the wall (and then scrubbed off)
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
Download the pdf version
More...
Russia’s gross international reserves (GIR) fell by about $10bn in the third quarter of 2020 as the government spent some money on alleviating the pain of the coronacrisis to reach $582.7bn as of the last day of November.
That is down from a recent high of $594.4bn at the end of August, when the economy was bouncing back nicely from the earlier pain after the lockdown was lifted.
One of the remarkable achievements of 2020 is the Central Bank of Russia (CBR) managed to add $28.3bn to its GIR in 2020 during the worst crisis in living memory that included oil prices being halved and falling into the 20s (and prices even briefly went negative at the start of the summer for the first time in history) and a deep devaluation of the ruble that touched RUB80 to the dollar at one point. Russia’s GIR on January 1, 2020 was $554.4bn, but close to $600bn at its peak in August and is now well above the CBR’s “comfort” level of $500bn set by CBR governor Elvira Nabiullina.
While the overall level of reserves has increased by 7.2% over the course of the year, which is not that big a change, the breakdown of the make-up of GIR shows some major policy decisions.
The first is that the level of reserves minus the gold holding has fallen by about $50bn from the peak at the start of the summer. Also the chart shows that since April last year the CBR has stopped buying gold, about the same time that the GIR reached Nabiullina’s comfort level of $500bn.
And finally, the government has barely touched the National Welfare Fund (NWF), which held $177.4bn as of November and has accumulated $53bn in addition to the $124.4bn it held at the start of 2020 – twice as much as the overall GIR accumulation.
There has been a fierce debate amongst Russia’s financial elite, with former Finance Minister and Audit Chamber head Alexei Kudrin arguing that the whole point of the NWF is to provide resources for when Russia is hit by one of its periodic crises and so the NWF should be tapped for stimulus spending.
Finance Minister Anton Siluanov has taken the more narrow line that the NWF is to cover budget deficits in crises, and while he does intend to use some of the money from the NWF for this purpose he has also raised the net sovereign borrowing by increasing the Russian Ministry of Finance ruble-denominated OFZ treasury bill issues from the usual circa RUB2.5 trillion ($33.8bn) to circa RUB4 trillion in 2020 to cover the deficit. This will increase Russia’s net sovereign debt from circa 14% of GDP to circa 20% of GDP, but crucially will mean that less money has to be drawn down from the NWF. The result of this decision is already clearly visible in the chart, which shows that very little money has been withdrawn from the NWF and Russia is going into 2021 with even more money in its rainy day fund than it had at the start of 2020.
In general the Kremlin has been criticised for spending too little on stimulus as the total government outlay on extra spending to fight the crisis is estimated to be a mere 3%-4% of GDP – one of the lowest levels in the world – while most developed nations are spending anything between 5% to 20% of GDP on stimulus.
The reserves chart shows clearly that Russia continues to run the same austerity policies that are designed to preserve its cash pile, which Russian President Vladimir Putin sees as a strategic weapon in the de facto economic war Russia is fighting with the US, rather than an economic resource that can be used to promote growth.
With a new Biden administration about to take over and already promising to increase the sanctions on Russia this may not be an entirely ridiculous stance to take.
-
This article is from bne IntelliNews Russia monthly country report. Sign up to receive the report to your inbox each month, which covers the slow-moving macro- and micro-economic trends, the major political news and a round-up of the main sectors and corporate news. First month is free and you can unsubscribe at any time.
See a sample here.
Sign up for a one-month trial here.
Question? Get in touch with sales@intellinews.com
Register here to continue reading this article and 5 more for free or purchase 12 months full website access including the bne Magazine for just $250/year.
Register to read the bne monthly magazine for free:
Already registered
Password could contain only a-z0-9\+*?[^]$(){}=!<>|:-_ characters and have 8-20 symbols length.
Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.
Forgotten password?
Email field can't be empty.
No user with this email address.
Access recovery request has expired, or you are using the wrong recovery token. Please, try again.
Access recover request has expired. Please, try again.
To continue viewing our content you need to complete the registration process.
Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.
If you have any questions please contact us at sales@intellinews.com
Sorry, but you have used all your free articles fro this month for bne IntelliNews. Subscribe to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free subscription to bne's digital weekly newspaper to subscribers to the online package.
Click here for more subscription options, including to the print version of our flagship monthly magazine:
More subscription options
Take a trial to our premium daily news service aimed at professional investors that covers the 30 countries of emerging Europe:
Get IntelliNews PRO
For any other enquiries about our products or corporate discounts please contact us at sales@intellinews.com
If you no longer wish to receive our emails, unsubscribe here.
Magazine annual electronic subscription
Magazine annual print subscription
Website & Archive annual subscription
Combined package: web access & magazine print annual subscription