Suffering for the ruble

At the end of 2017, the Russian currency will weaken against the dollar by 9-10%. This follows from the new policy of the Ministry of Finance, announced at the end of January. Who wins and who loses - found out The New Times

The beginning of the year was quite optimistic for the economy. The industry is gradually recovering after a two-year shock. The Donald Trump administration is making vague gestures towards the Russians — or rather, not making the usual threatening gestures, which is already a good thing. The most crazy investors in Russian assets closed 2016 with profits - the strengthening of the real exchange rate of the ruble by 20% makes investing in Russia, albeit extremely dangerous, but an exciting game. The oil deal between Russia and OPEC is also going unexpectedly well - the almost traditional collapse in black gold prices after the New Year holidays did not happen, Brent is holding on to the average December level of $ 55 per barrel. Against this background, the ruble is quite confidently strengthening and has reached a level below 60 rubles/$, which, of course, does not look like a big success for people who still remember it at 30 rubles/$, but at least something.

The Ministry of Finance intends from mid-February to spend all the windfall profits from oil exports (calculated - more than 100 billion rubles per month) to buy foreign currency on the open market. As a result, the third sovereign fund will actually be created

And then came January 25, when the Ministry of Finance revealed the meaning of the decisions taken at the government meeting with President Putin on January 18. Namely: in the name of stability, predictability and reducing the impact of volatile market conditions on the Russian currency, the Ministry of Finance will stabilize the ruble. And to be even more precise, it will enter the foreign exchange market with operations that will make the ruble cheaper or at least not be too expensive.

Ruble detachment

The meaning of the operations, which, based on the report of the Ministry of Finance, are largely based on the decisions of Vladimir Putin (in any case, as is usually the case in such cases, the government is very careful with the answers to the question of who invented all this and why), is as follows. The Russian budget for 2017 is based on an oil price of $40 per barrel and oil and gas revenues of about 5 trillion rubles. At this price of oil, about 2 trillion rubles will be withdrawn from the Reserve Fund and the National Welfare Fund (NWF) by the end of the year. At the current level of oil prices and the prevailing dollar exchange rate, the budget will receive another 1.4 trillion rubles. additional revenues, and if you do not increase budget spending - and this is easy, just follow the law on the budget - by the end of the pre-election year 2017, the Russian Federation will retain some part of the Reserve Fund, will not touch the NWF at all and will have a moderately strengthening national currency (and, therefore, some inflow of foreign investment), moderate, about 1.5%, budget deficit, good chances for successful privatization and recovery economic growth - 1% of GDP per year or even more. In general, quite a decent state of affairs for today, not a boom, of course, but better than the expectations of critics.

The idea, which was published by the Ministry of Finance, sounds strange at first glance. The Ministry of Finance intends immediately, without waiting for anything, right now (since mid-February) to spend all the windfall profits from oil exports (estimated - more than 100 billion rubles per month) to buy foreign currency on the open market. As a result of these operations, a temporary, third, sovereign fund will actually be created - also in foreign currency, all operations will be carried out by the Central Bank and will store foreign exchange assets on the accounts of the Treasury of the Ministry of Finance at home. In the event that oil falls below $40 per barrel, the Ministry of Finance undertakes to sell all this currency (presumably not on the open market, but directly to the Central Bank, so as not to additionally influence the ruble exchange rate, which remains formally floating). The market will be informed in advance how much foreign currency the Central Bank will buy this month, on this day and even at this hour for the needs of the Ministry of Finance - the formulas have been made public, the schedule will be published on the website of the Ministry of Finance at the beginning of the month. All this will continue until the government adopts a "budget rule" - a permanent legislative mechanism for replenishing and spending the Reserve Fund. After that, the "third fund" will not be needed. What will happen to it in this case is not reported, but it is more or less clear that it will somehow be merged with the current Reserve Fund.

the question of who will pay for all this splendor has a predictable answer - if you are not the owner of a large exporting enterprise, then you will pay

The strangeness of what is happening is that, in fact, in order to achieve the announced goals - stabilizing the ruble exchange rate - the Ministry of Finance not only did not need to get involved in all these complex operations, but did anything at all. Expensive oil increases budget revenues, the budget deficit is reduced, the use of sovereign funds is not necessary, the ruble is stable - what more could you want? Of course, the point is largely in the fact that the Ministry of Finance has an excess of excess profits in rubles at the beginning of the year, and the main expenses are at the end: by buying dollars now and selling them in the fall, you can earn a little on the difference in exchange rates. But this is not the only thing - and the internal calculations of the Ministry of Finance, published by Reuters on January 26, clearly show this. The true task assigned to the department of Anton Siluanov, of course, can be described by the phrase "stabilization of the national currency", but it is more accurate to speak of its weakening. As follows from the Reuters document, the ruble exchange rate on average during the year will "float" around the equilibrium figure of 58 rubles/$. With the implementation of the new strategy, the exchange rate will be 65 rubles/$. Because of this, already at the end of 2017, the budget deficit will be only 0.7% of GDP, the Reserve Fund will not be spent, but will increase by 240 billion rubles. Further - more: with oil at $60 per barrel, the budget will be balanced, and an additional 870 billion rubles will go into reserves. With oil prices above $60, there is already a budget surplus, and sovereign funds begin to burst again from income.

True, in the calculations of the Ministry of Finance, the ruble should always become cheaper in comparison with the current rate - at least until oil rises above $75 per barrel.

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Ordinary protectionism

The first and most obvious question about who will pay for all this splendor has a predictable answer - if you are not the owner of a large exporting enterprise, then you will pay. The policy of undervaluing the national currency is, by definition, the policy of subsidizing exports. In turn, export subsidies always and everywhere have the same goals and the same consequences. It is beneficial primarily to foreign consumers of export goods - you deliberately take less money from them in their currency in order to buy from you. They are in the win. Russian exporters also win, or rather, not lose - their expenses in foreign currency are reduced, profits at least remain at the current level, the local market, however, becomes somewhat less interesting for them. The main gain is that the deliberate artificial undervaluation of the exchange rate makes it possible to slow down structural shifts in the economy. In principle, this is the same protectionism, but a little more cunningly arranged - consumers in the domestic market lose part of the value of their savings and assets in foreign currency so that the exporting part of the economy does not reduce profitability with this money.

From an international point of view, one way or another, we are talking about what at the beginning of the decade they liked to call "currency wars" - about the competitive devaluation of the ruble. This is exactly what the members of the G20, including Russia, pledged not to do in 2009, and it is for this that Trump intends to “punish” China, which undervalues ​​the yuan in a much more non-obvious way than the Treasury intends to do. However, it is doubtful that anyone would begin to express claims to Russia about this: in relations with the Russian Federation, the world has much bigger problems than tricks with the exchange rate - these are its internal affairs.

In many ways, the meaning of what is happening is simply to postpone the inevitable structural shifts in the economy for a while and prevent the natural change in the structure of owners in them. Protectionist policy, in fact, always works in the same way - the executive branch helps its business partners working in the export sector to maintain and strengthen their positions in the national economy, counteracting new and future entrepreneurs.

How to be saved

The suffering side, as already mentioned, is citizens and organizations, one way or another forced to use imported goods and services. In Russian reality, these are, first of all, unhealthy people: medicines are traditionally a critical import in Russia, they will inevitably rise in price.

In addition, everything more or less modern, imported from abroad, from cars to gadgets, will rise in price due to weakening. Alas, the logic of protectionism is always and everywhere the same. The expectation that the “domestic manufacturer”, which is easily guessed as a partner of a government official, in the absence of competitors will be more freely engaged in “innovative breakthroughs” and “production of high-tech products”, does not work even with the conscientiousness of this pair of actors - their freedom is provided temporarily ´m and property lag in the development of the economy. This is, in fact, the price paid for it.

the authorities in the country at all levels are completely absorbed in playing big business, the shortage of entrepreneurs and entrepreneurship in Russia, meanwhile, is constantly growing,
and earnings in the status of an employee with such a government policy are still doomed to stagnation

In our case, it is not large, but it exists - the ruble, based on the calculations of the Ministry of Finance, should fall in price in 2017 from current levels by about 9-10%.

How to minimize this price at least for yourself? If we are talking about a company, then in practice there is no way - either this is a transition to cheaper imported components with a loss in quality, or, on the contrary, a transition to more expensive niches and the release of better products with the expectation of export, in full accordance with the plans of the government . If we are talking about a household, then the obvious and well-known response to the actions of the Russian White House is medium-term savings in foreign currency and short-term, for three to four months, in ruble deposits that are still relatively profitable. The choice of currencies is quite small. At least now, while all the turmoil in international markets is associated with the name of Donald Trump, the risks of a weaker dollar are higher than the risks of a weaker euro - at least if you believe that the EU will not fall apart in the coming months following the results of the elections in France and Germany, it makes sense to believe in the euro. In the long term, alas, gold and the dollar remain the most reliable assets for those who do not have the opportunity to influence what is happening and remain a passive investor.

However, why not invest in some business in Russia - with all its risks, problems and difficulties? As it is easy to see, the authorities in the country at all levels are completely absorbed in playing big business, the deficit in entrepreneurs and entrepreneurship in Russia, meanwhile, is constantly growing, including for demographic reasons, and earnings in the status of an employee with such a government policy are still doomed to stagnation. Of course, this is a big risk. But no more than just staying here - and we're staying, aren't we?