| The 2003 problem will be solved through pension contributions from employers An investor of irresistible force has appeared in Russia. As the Vremya Novostei newspaper reported yesterday, the government has appointed the Pension Fund as such an investor. He is allowed to invest “temporarily available funds” in government securities. According to various estimates, from 100 to 110 billion rubles are “gathering dust” in the Pension Fund’s accounts with the Central Bank. These funds are more than enough to reduce the yield of ruble government securities to negative values: the nominal volume of this market is only 195 billion rubles.
However, the likelihood that the government will start shooting sparrows from a cannon for the sake of a penny profit, reducing the liquidity of an already sluggish market, is extremely small. In fact, the Ministry of Finance uses “extra” pension money to play in the market of foreign currency obligations - Eurobonds and government bonds. According to our newspaper, a list of such securities has already been prepared: it includes foreign currency obligations with a maturity date of up to 2005. This tactic will make it possible to “wipe down” the peak of external debt payments in 2003, when the country will have to pay $19 billion to creditors, including more than $5 billion to holders of two tranches of Eurobonds and the fourth tranche of government bonds. If the Pension Fund of Russia becomes the main holder of these securities, then the Ministry of Finance will be able to pay off up to a quarter of its foreign currency obligations in 2003 not with “real” money, but with new government securities.
The Pension Fund itself is not enthusiastic about this prospect: sources in the fund say that the government is trying to mobilize free funds intended for pensioners into the federal budget. And this undermines the sustainability of the pension system.
Fiscal successes in recent years have allowed the authorities not only to balance the federal budget, but also to “pump up” the Pension Fund with free resources. By the end of last year, 98.4 billion unused rubles had accumulated in the Pension Fund’s accounts. One can only guess how much additional income was raised in 2001. The Pension Fund itself is trying not to advertise the wealth that has accumulated. “In the first quarter, the Ministry of Taxes exceeded the target for collecting income for the Pension Fund by 2%, and in the second - by 6%,” says a representative of the fund. “Since in the first half of the year the total amount of pension fees should be about 160 billion rubles,” The fund did not have too much extra money - less than 10 billion."
The Development Center believes that the Pension Fund is becoming poorer. According to the center, since the beginning of the year, the budget and extra-budgetary funds have accumulated more than 120 billion rubles in accounts with the Central Bank, and the bulk of this money belongs to the Pension Fund.
At first glance, the head of the Pension Fund of Russia, Mikhail Zurabov, has every reason to rejoice. The government says it cares about guarantees of “preservation and growth of the fund’s temporarily available funds.” Now the money accumulated by the Pension Fund is depreciating by about 2% per month. By purchasing government securities, the fund will be able to count on coupon income, which will at least partially compensate for the impact of inflation.
However, the new investor will be tied hand and foot. The Pension Fund will be able to buy only those securities that the government indicates to it. He will be deprived of the right to sell them before the maturity date without the consent of the cabinet.
Until now, the accumulation of “pension” money has served the monetary authorities as a tool for sterilizing the excess money supply. The Pension Fund paid for the sterilization. The Pension Fund's entry into the foreign currency government securities market looks doubly justified in this regard, says Oleg Vyugin, executive vice president of Troika Dialog Investment Company. “This money will continue to work for sterilization, while the government will be able to use it in public interests,” the economist states.
Financiers were prepared in advance for the appearance of a new major player on the Russian foreign debt market. In this regard, they recall the rally in the Russian currency bond market that happened 3-4 weeks ago. Russian securities grew, despite the fact that other emerging markets were literally in a fever. Their prices then increased by an average of 2%, with the growth leaders being “nearby” Eurobonds - with a maturity until 2005, which rose in price by 3-4%. It was then that a version appeared in the analytical comments of investment banks that the debt was being bought off by structures close to the Russian authorities. Most likely, the purchase was carried out with an eye to further resale, because the Pension Fund is authorized “to involve organizations providing financial services if necessary.” Elena MYAZINA, Vladimir FEDORIN |
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