Russian debts dynamics

Note kindly translated by Anne-Marie de Grazia

The amount of gross indebtedness of Russian actors to non-residents is subject to debate. Yet figures exists, and from these figures one can evaluate the « cost » of the strategy adopted by Russia at the beginning of the years 2000. We must remind that the choice was then taken to go look outside the country for financing, despite a commercial balance, which was largely in excess. This choice goes back to compromises of which we have already treated in a previous note. We notice two things on chart 1. On the one hand, the proportion of public debts decreases rapidly. The indebtedness is therefore a private sector indebtedness. On the other hand, it increases considerably from 2006 (abolition of capitals controls) to the financial crisis of 2008.

Chart 1

 A - Endette exterRus

Source : Central Bank of Russia.

It is important to observe that the control of capitals had by no means prevented Russian companies (and banks) from finding financing outside the country, but that it had put a break on this movement. The 2008-2010 financial crisis brought about a debt contraction, but later on, the movement started again, and accelerated until the end of Spring 2013.

The second point relates to the proportion of this debt according to the currencies used. We notice that in reality over one quarter of this private debt is in… rubles. The ruble has therefore been an instrument of indebtedness to a greater extent than the Euro (about 12%) but, of course, to a lesser extent than the US Dollar.

Chart 2

A - Dette Dev2

Source : Central Bank of Russia.

One notices otherwise that there was a sudden spell of indebtedness by way of the Russian non-banking sector. This relates probably to the giant loan negotiated by ROSNEFT to buy up TNK-BP. But one also notices a rise in indebtedness linked to direct investment operations in Russia. Therefore, this indebtedness against non-residents merely related to financial operations in order to finance what is called the “external” growth of companies.

Chart 3

 A - Dette dev3

Source : Central Bank of Russia.

This indebtedness had as a counterpart an obligation of reimbursement. Part of these loans were short-term (less than three years). The reimbursements which Russian companies and banks had to face up to during the 2nd semester of 2014 amounted to 120 billion dollars. We know that the amount in the first semester of 2015 will only be half this amount, and that there will be yet another decrease in the 2nd semester of 2015. Under such conditions, one can raise questions as to extent of the sales of foreign currencies by the Central Bank in 2014 (it was operating, selling as well as buying, until 2014 with targets for these operations which could be exceeded in the framework of a targeted policy of foreign exchange rates). We notice that the Central Bank had to sell for close to 79 billion dollars, but that this compares rather well with the sales of 2013. Moreover, we observe that the highly speculative episode of last December did not have the expected consequences. In order to fight against the strong speculation on the ruble, the RCB had to sell only about 11 billion, not 19 billion, as was announced in the press. This proves that, in reality, it bought dollars when the ruble returned to a more normal valuation. The situation should continue to unwind during the first semester of this year and, with the probable rise in oil prices which one can expect during the 2nd semester, the Central Bank should find itself in the position of a net buyer of dollars, in order to avoid the ruble appreciating too quickly.

Table 1

Operations in US Dollars of the Central Bank (in million dollars)

Total puchases

Target of purchases

Total sales

Target of sales

Mar-10

14483,51

3064,99

0

0

Apr-10

11336,7

4172,65

0

0

May-10

4317,16

3445,46

0

0

June-10

1660,64

1660,64

0

0

Jul-10

464,27

464,27

0

0

Aug-10

1078,35

1078,35

0

0

Sept-10

0

0

-1172,47

-1172,47

Oct-10

0

0

-3230,28

-2119,4

Nov-10

0

0

-4759,77

-2635,63

Dec-10

0

0

-720,32

-720,32

Jan-11

645,67

645,67

0

0

Feb-11

3481,82

2146

0

0

Mar-11

4491,48

3434,62

0

0

Apr-11

3284,71

3002,67

0

0

May-11

3915,98

3267,58

0

0

Jun-11

3230,7

2799,78

0

0

Jul-11

3706,6

2855,52

0

0

Aug-11

961,64

767,39

-700,88

-297,01

Sept-11

0

0

-6765,68

-2017,4

Oct-11

0

0

-4372,64

-2550,5

Nov-11

0

0

-1386,7

-1386,7

Dec-11

0

0

-1773,14

-1773,14

Jan-12

427,72

427,72

-635,26

-635,26

Feb-12

2595,61

2445,61

0

0

Mar-12

3927,76

3423,97

0

0

Apr-12

3592,57

3489,48

0

0

May-12

1516,07

1469,36

-276,35

-276,35

Jun-12

0

0

-2207,29

-1894,06

Jul-12

0

0

-1044,84

-1044,84

Aug-12

0

0

-385,47

-385,47

Sept-12

0

0

-453,81

-453,81

Oct-12

0

0

-22,45

-22,45

Nov-12

0

0

-48,59

-48,59

Dec-12

0

0

0

0

Jan-13

595,96

595,96

0

0

Feb-13

118,96

118,96

0

0

Mar-13

0

0

0

0

Apr-13

0

0

-663,06

-663,06

May-13

0

0

-236,81

-236,81

Jun-13

0

0

-2707,63

-2125,89

Jul-13

0

0

-4182,51

-3074,66

Aug-13

0

0

-5455,92

-3054,57

Sept-13

0

0

-3178,4

-2190,95

Oct-13

255,42

0

-1909,3

-1280,63

Nov-13

0

0

-3328,13

-1023,66

Dec-13

0

0

-3569,93

-1117,34

Jan-14

0

0

-7816,77

-216,2

Feb-14

0

0

-6158,34

0

Mar-14

0

0

-22296,84

0

Apr-14

0

0

-2401,86

0

May-14

1437,64

0

-365,6

0

Jun-14

1356,52

0

0

0

Jul-14

0

0

0

0

Aug-14

0

0

0

0

Sept-14

0

0

0

0

Oct-14

0

0

-27207,52

0

Nov-14

0

0

-773,91

0

Dec-14

0

0

-11901,75

0

The financial situation of Russia appears then to be much more healthy than what we are made to think or believe in the French and Western press generally.


Jacques Sapir

Ses travaux de chercheur se sont orientés dans trois dimensions, l’étude de l’économie russe et de la transition, l’analyse des crises financières et des recherches théoriques sur les institutions économiques et les interactions entre les comportements individuels. Il a poursuivi ses recherches à partir de 2000 sur les interactions entre les régimes de change, la structuration des systèmes financiers et les instabilités macroéconomiques. Depuis 2007 il s’est impliqué dans l’analyse de la crise financière actuelle, et en particulier dans la crise de la zone Euro.

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