Download PowerPoint-Präsentation

Generous Budgetary Policy Is
the Biggest Threat for the
Economy
May 2010
Anton Stroutchenevski, Senior Economist
Slide 1 | May 2010 | Generous Budgetary Policy Is the Biggest Threat for the Economy | Evgeny Gavrilenkov, Stroutchenevski Anton
Rising oil price and expanding foreign borrowing
failed to accelerate Russia’s growth:
Russia can grow at any oil price
12%
2007
1999
6%
600
36%
500
30%
0
20
40
60
$/ bbl Urals
Source: State Statistics Service, Troika estimates
80
100
Public debt
Private debt
3Q09
0%
4Q08
0
2009
-9%
1Q08
6%
2Q07
100
-6%
3Q06
12%
4Q05
200
-3%
1Q05
18%
2Q04
300
0%
3Q03
24%
4Q02
400
3%
1Q02
GDP growth, y-o-y
9%
Private debt/ GDP (rhs)
Source: State Statistics Service, Troika estimates
Slide 2 | May 2010 | Generous Budgetary Policy Is the Biggest Threat for the Economy | Evgeny Gavrilenkov, Stroutchenevski Anton
The government expects budget revenues to fall,
R bln...
Total revenues
Profit tax
Social tax
VAT
Raw materials extraction tax
Export duties
Import duties
Other
2005
2006
2007
2008
2009
2010E
2011E
2012E
5,127
378
268
1,472
855
1,352
271
533
6,276
510
316
1,511
1,094
1,896
342
608
7,779
641
405
2,262
1,123
1,835
488
1,026
9,274
761
507
2,132
1,605
2,859
626
784
7,337
195
510
2,050
982
2,042
467
1,091
6,950
–
–
–
–
–
–
–
7,456
–
–
–
–
–
–
–
8,070
–
–
–
–
–
–
–
Note: The government initially forecasted revenues in 2009 at R6,713.8 bln. In 4m10 revenues reached R2,618.3 bln, while the deficit was at R444.6 bln.
Source: Finance Ministry
Slide 3 | May 2010 | Generous Budgetary Policy Is the Biggest Threat for the Economy | Evgeny Gavrilenkov, Stroutchenevski Anton
… but has not cut expenditures, R bln
Total expenditures
State administration
National defense
National security
National economy
Housing sector
Education
Medical care, sport
Social policy
Transfers
Other
2005
2006
2007
2008
2009
2010E
2011E
2012E
3,514
501
581
450
249
7
162
88
178
1,246
52
4,281
530
682
550
345
53
212
148
201
1,499
62
5,983
812
832
667
693
295
295
197
214
1,900
79
7,567
835
1,041
836
1,025
130
355
278
294
2,675
99
9,637
829
1,188
1,005
1,651
152
418
352
324
3,594
125
9,887
1,087
678
727
1,366
103
386
325
329
3,725
1,160
9,390
–
–
–
–
–
–
–
–
–
–
9,681
–
–
–
–
–
–
–
–
–
–
Note: The government initially planned expenditures in 2009 at R9,845.2 bln.
Source: Finance Ministry
Slide 4 | May 2010 | Generous Budgetary Policy Is the Biggest Threat for the Economy | Evgeny Gavrilenkov, Stroutchenevski Anton
Due to increased expenditures, the breakeven oil
price climbed to $100/bbl Urals
Breakeven oil price, $/bbl Urals
Federal budget expenditures, % of GDP
120
25%
100
20%
80
15%
60
10%
40
5%
20
0
0%
2003
2004
2005
2006
2007
2008
2009 2010E 2011E
2003
2004
2005
2006
2007
2008
2009 2010E 2011E
Note: The chart shows two scenarios for 2011: (1) spending kept at around current levels (i.e. R10 trln); and (2) spending cut to R9.3 trln as
stipulated by the current medium-term fiscal plan.
Source: Finance Ministry, Troika estimates
Slide 5 | May 2010 | Generous Budgetary Policy Is the Biggest Threat for the Economy | Evgeny Gavrilenkov, Stroutchenevski Anton
Russia is returning to more a balanced model of
economic development after several years of
overheating
15%
GDP, y-o-y
10%
5%
1961
1999
1989
0%
-5%
2009
-10%
-15%
1992
10%
15%
20%
25%
30%
35%
40%
Investments/GDP
Source: State Statistics Service, Troika estimates
Slide 6 | May 2010 | Generous Budgetary Policy Is the Biggest Threat for the Economy | Evgeny Gavrilenkov, Stroutchenevski Anton
A larger government and a budget deficit in Russia
usually means worse economic performance
15%
2000
2006
GDP, y-o-y
8%
2000
2007
GDP growth, y-o-y
12%
2002
4%
1997
0%
-4%
1998
-8%
2009
-12%
-16%
30%
1994
1992
33%
36%
39%
42%
Public expenditures/ GDP
45%
48%
10%
2010
5%
1997
2005
0%
-5%
1993
-10%
-15%
-15%
2009
-10%
-5%
0%
Budget balance, % of GDP
Source: State Statistics Service, Finance Ministry, Troika estimates
Source: State Statistics Service, Finance Ministry, Troika estimates
Slide 7 | May 2010 | Generous Budgetary Policy Is the Biggest Threat for the Economy | Evgeny Gavrilenkov, Stroutchenevski Anton
5%
10%
Inflation is falling in any case
20%
15%
10%
5%
0%
Jan ’08
Jul ’08
Jan ’09
y-o-y
Jul ’09
Jan ’10
Jul ’10
6m average
Source: State Statistics Service, Troika estimate
Slide 8 | May 2010 | Generous Budgetary Policy Is the Biggest Threat for the Economy | Evgeny Gavrilenkov, Stroutchenevski Anton
Nominal interest rates have started to decline…
25%
20%
15%
10%
5%
0%
2003
2004
2005
2006
1-day MIACR
Credit rate
2007
2008
2009
2010
Deposit rate
Refinancing rate
Source: Central Bank, State Statistics Service
Slide 9 | May 2010 | Generous Budgetary Policy Is the Biggest Threat for the Economy | Evgeny Gavrilenkov, Stroutchenevski Anton
… but real rates have grown due to decelerating
inflation
Based on 6m moving average inflation
Based on y-o-y inflation
10%
15%
10%
5%
5%
0%
0%
-5%
-5%
-10%
-10%
-15%
-20%
-15%
2003
2004
2005
2006
2007
1-day MIACR
Credit rate
Source: Central Bank, State Statistics Service
2008
2009
2010
Deposit rate
Refinancing rate
Jan'
08
Apr'
08
Jul'
08
Oct' Jan'
08
09
Apr'
09
Jul'
09
Oct' Jan' Apr'
09
10
10
1-day MIACR
Credit rate
Jul'
10
Deposit rate
Refinancing rate
Source: Central Bank, State Statistics Service
Slide 10 | May 2010 | Generous Budgetary Policy Is the Biggest Threat for the Economy | Evgeny Gavrilenkov, Stroutchenevski Anton
Oct'
10
Annual inflation has been slowing faster than the
Central Bank is cutting rates
Annual inflation versus refinancing rate
Monthly inflation
16%
2.5%
14%
2.0%
12%
1.5%
10%
1.0%
8%
0.5%
6%
Jan ’09 Mar ’09 May ’09 Jul ’09 Sep ’09 Nov ’09 Jan ’10 Mar ’10
CPI, y-o-y
Source: State Statistics Service, Central Bank
Refinancing rate
0.0%
Jan
Feb Mar Apr May Jun
2008
Jul
Aug Sep
2009
2010
Source: State Statistics Service, Central Bank, Troika
Slide 11 | May 2010 | Generous Budgetary Policy Is the Biggest Threat for the Economy | Evgeny Gavrilenkov, Stroutchenevski Anton
Oct
Nov Dec
Banks’ voluntary reserves were growing
Voluntary reserves and interest rates
Central Bank real deposit rate and
voluntary reserves
30
1,500
25
1,250
20
1,000
15
750
10
500
5
250
0
0
Jan ’08
Jul ’08
Jan ’09
Voluntary reserves, R mln (rhs)
REPO rate
Jul ’09
Jan ’10
1-day MIACR
Deposit rate
1,600
-2
1,200
-3
800
-4
400
-5
0
Jan ’09
-6
Apr ’09
Jul ’09
Voluntary reserves, R mln
Oct ’09
Jan ’10
Apr ’10
Deposit rate in real terms (rhs)
Source: Central Bank, Troika
Source: Central Bank
Slide 12 | May 2010 | Generous Budgetary Policy Is the Biggest Threat for the Economy | Evgeny Gavrilenkov, Stroutchenevski Anton
The market expects rate cuts to continue
Bonds and loans in banks’ portfolios
Average effective yield and refinancing rate
4,000
18,000
25%
3,500
17,500
20%
3,000
17,000
15%
2,500
16,500
10%
2,000
16,000
5%
15,500
0%
Jan ’09
1,500
Jan ’09 Mar ’09 May ’09 Jul ’09 Sep ’09 Nov ’09 Jan ’10
Bonds, R bln
Source: Central Bank
Loans to economy, R bln (rhs)
Apr ’09
Jul ’09
Oct ’09
IFX-Cbonds average effective yield
Jan ’10
Apr ’10
Refinancing rate
Source: State Statistics Service, Central Bank
Slide 13 | May 2010 | Generous Budgetary Policy Is the Biggest Threat for the Economy | Evgeny Gavrilenkov, Stroutchenevski Anton
Sustainable growth implies moderate ruble
appreciation and a positive (or balanced) current
account
GDP growth vs current account balance
Source: Central Bank, State Statistics Service, Troika estimates
GDP growth vs real effective ruble exchange rate
Source: Central Bank, State Statistics Service, Troika estimates
Slide 14 | May 2010 | Generous Budgetary Policy Is the Biggest Threat for the Economy | Evgeny Gavrilenkov, Stroutchenevski Anton
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Slide 15 | May 2010 | Generous Budgetary Policy Is the Biggest Threat for the Economy | Evgeny Gavrilenkov, Stroutchenevski Anton