{"id":659,"date":"2008-10-18T00:08:10","date_gmt":"2008-10-17T23:08:10","guid":{"rendered":"http:\/\/www.gerhard-mangott.at\/?p=659"},"modified":"2014-05-01T15:02:15","modified_gmt":"2014-05-01T13:02:15","slug":"russia-on-a-slippery-slope","status":"publish","type":"post","link":"https:\/\/www.gerhard-mangott.at\/?p=659","title":{"rendered":"Russia on a slippery slope"},"content":{"rendered":"

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It is up<\/span> to 60\u00a0<\/span>billion<\/span> dollars\u00a0<\/span>of foreign capital Russia<\/span> has lost since August. Russia\u2019s hard currency and gold reserves have slipped for the last 6 weeks down 65 billion. A further meltdown of its currency reserves could have a negative effect on<\/span> Russia\u2019s credit rating<\/span> (which currently stands at BBB+). Russian companies and banks which are heavily indebted to western banks \u2013 total sovereign corporate debt is about 480 Bln. USD \u2013 suffer from a serious liquidity crunch. In the 4th quarter of 2008 only, Russian companies will have to pay back or refinance a combined debt of 47 Bln. USD to foreign creditors.
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Russia\u2019s macroeconomic balance sheet is turning blue. Russia\u2019s current account will break even in early 2009, her trade balance will touch zero in 2010. With prices for Russia\u2019s Urals blend currently down at 65 USD per barrel Russia\u2019s budget will turn negative for the first time since 2000. (the current budget will\u00a0 be balanced only with average oil prices at 70 USD per barell). In 2008 Russia still commanded a budget surplus of 8.2 per cent of GDP. What is more, if oil prices going down to 55- USD, the Russian Central bank will be hard pressed to let the ruble devaluate.<\/p>\n

The significant drop in crude oil prices \u2013 down from 142.5 Bln. USD in July to 66 USD per barrel of Ural\u2019s Blend this week \u2013 triggers a dangerous downward spiral. Russia\u2019s state oil company Rosneft is hugely indebted. With capital supplies drying up Rosneft needs state financial support. Like all big Russian oil companies, Rosneft is currently facing a crisis and will lack sufficient funds for the exploration of new oil fields. On October 14th, the Russian government passed a bailout deal for Rosneft (4.2) LukOil (2.0), TNK-BP (1.8) and Gazprom (1.0) worth 9 Bln. USD.<\/span><\/p>\n

Russia\u2019s oil production, however, is already stagnating. With new investment shortened or delayed, oil production will decline, for the first time since many years. The Russian government has started aiding the ailing oil industry by lowering taxes and export tariffs. As a consequence, budget revenues from the oil sector is declining. Given the fact that the Russian oil and gas sectors generate about 34 per cent of Russia\u2019s budget this will have a major impact on the budgetary balance. Russia\u2019s ambitious plan to boost infrastructure investment, modernising health care, education and the pension system, mentioned in ist long-term modernisation agenda till 2020, will fall victim to a lack of budgetary means.<\/p>\n

Russia thus faces a bleak future. Falling oil prices and declining production cut in state revenues. The huge indebtedness of oil companies demand tax cuts for the oil industry thus further decreasing state revenue. Both trends will turn the budget negative, the trade balance down. In addition, falling oil prices will push Russia to lower gas export prices as well, as long-term contracts with EU gas consumers link gas prices to a fuel basket with a time lag of between 3 and 6 months. Russia\u2019s economic miracle takes on some nasty stains.<\/span><\/p>\n

Picture taken from:<\/span>
\n http:\/\/blog.izilogipro.com\/crise-de-limmobilier-la-fnaim-voit-enfin-venir-le-mur.html<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

It is up to 60\u00a0billion dollars\u00a0of foreign capital Russia has lost since August. Russia\u2019s hard currency and gold reserves have slipped for the last 6 weeks down 65 billion. A further meltdown of its currency reserves could have a negative effect on Russia\u2019s credit rating (which currently stands at BBB+). Russian companies and banks which … Continue reading Russia on a slippery slope<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[9],"tags":[],"class_list":["post-659","post","type-post","status-publish","format-standard","hentry","category-russia"],"_links":{"self":[{"href":"https:\/\/www.gerhard-mangott.at\/index.php?rest_route=\/wp\/v2\/posts\/659","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.gerhard-mangott.at\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.gerhard-mangott.at\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.gerhard-mangott.at\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gerhard-mangott.at\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=659"}],"version-history":[{"count":55,"href":"https:\/\/www.gerhard-mangott.at\/index.php?rest_route=\/wp\/v2\/posts\/659\/revisions"}],"predecessor-version":[{"id":3159,"href":"https:\/\/www.gerhard-mangott.at\/index.php?rest_route=\/wp\/v2\/posts\/659\/revisions\/3159"}],"wp:attachment":[{"href":"https:\/\/www.gerhard-mangott.at\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=659"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.gerhard-mangott.at\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=659"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.gerhard-mangott.at\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=659"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}