New oil needle, economist Branko Milanovich about the consequences of the war and the buyer of the Russian McDonald's

New oil needle, economist Branko Milanovich about the consequences of the war and the buyer of the Russian McDonald's

Closed economic statistics and the unprecedented of the crisis make it difficult to assess the consequences of the “military operation” for the Russian economy. But one consequence is already obvious - Russia is increasingly sitting on the oil needle. This is clearly visible in April numbers about the execution of the federal budget: oil and gas revenues are growing, and all the others are also confidently falling. Judging by the latest data on the purchase of Russian oil by China, this trend will continue, but the benefit of “turning to the east” will be limited: large Chinese companies are still ready to work with Russia, but only with very large discounts.

What's happening

The Bell studied the data of the Ministry of Finance on the execution of the federal budget (recent data were published for April 2022 on May 17). On their basis, one can assess the influence of the "military operation" on the economy.

• In general, non -Neneftegazy income (VAT, personal income tax, income tax, etc.) in April decreased by 18% in annual terms (1.058 trillion rubles against 1.29 trillion rubles in April 2021).
• Relapses from oil and gas exports, despite the sanctions discounts, continue to support the Russian budget. Oil and gas revenues against the background of high oil prices (in April, according to the Ministry of Finance, the average Urals price amounted to $ 70.5, the Brent discount amounted to 1.8 trillion rubles in March in April in March.
• Compared to April 2021, oil and gas revenues of the budget doubled. Their share in the total budget revenues according to the results of the month amounted to 63%, four months of 2022-48%(according to the results of 2021, this figure was 36%, 2020-28%, the Kommersant recalls).

But the record growth of oil overpromessions did not help the budget go into plus. Over April 2022, the first federal budget deficit in the amount of 262.3 billion rubles was formed this year. According to the results of four months of the year, a surplus is still fixed in the amount of 1.04 trillion rubles.

At the end of April, the Minister of Finance Anton Siluanov estimated a possible federal budget deficit following the results of 2022 at least 1.6 trillion rubles. In response to the question of what maximum the deficit can achieve, Siluanov explained: “Everything will depend on response measures, how many support measures are taken. I hope the main ones are accepted. " From his words it followed that the anti -crisis package of economics support measures would cost a budget of 4 trillion rubles.

Failure without oil and gas

The first detail that catches the eye in the data of the Ministry of Finance (not counting the growth of military expenses) is the failure in VAT. Together with the tax on mineral mining (NPPs), this is one of the two main taxes for the Russian budget: it provides about a third of all its revenues and almost 60% of all non -Neniftegazy income. The end payers of VAT are Russians: the 20%tax pays to the budget, but automatically shifts it to the prices of goods and services for end consumers.

In April 2022, internal VAT entered the budget in the amount of only 192 billion rubles - more than half as much as in April 2021 (415 billion). VAT fees from imported goods in April 2022 decreased by one and a half times in annual terms (212.5 billion rubles against 330.5 billion in April 2021). This figure reflects the payment of tax for January -March: VAT is paid quarterly, and by April 25, the companies transfer the first part of the tax based on the results of work in the first quarter.

The reasons for such a dramatic reduction in tax revenues may be associated with a combination of several factors. The first is “paper”: from the first quarter of 2022, the application of the declarative procedure for compensation for VAT has expanded , in which the budget first satisfies the company's repayment of tax, and only then the tax authorities check its validity and, if necessary, return back to the budget. The representative of the Ministry of Finance referred to this innovation in a conversation with The Bell, adding that it is incorrect to say about a reduction in VAT for one month, since this is a quarterly tax.

But it is impossible to explain the entire collapse with an accelerated return on VAT - especially since for large companies that pay more than 2 billion rubles for three years, this procedure has acted earlier. At the VAT fee, the compression of consumption that began in March affected (fresh retail data for April will become known only on June 1) and mass departure from Russia of the foreign business. “The revenue of a large number of companies fell precisely by April. Not only everyone who suspended work in Russia fell out, but also those who served them lost customers and revenues. Hence such a strong effect, ”said Andrey Grachev, head of Birch Legal’s tax practice.

There are no such difficulties with VAT from imported goods - everything is clear here. “The decrease in imported VAT is associated with a reduction in import, as well as strengthening the ruble exchange rate in April of this year,” the Ministry of Finance representative told The Bell.

The actual drop in imports in the conditions of recentlyclassified FCS statistics on foreign trade is still impossible to evaluate. It remains to wait for the publication of reports of other countries that export goods to Russia. But last week, The Economist magazine has collected statistics on trading with Russia eight of its large foreign trade partners (the largest EU countries, China, the USA, Japan and South Korea), which account for almost 60% of Russian imports and more than 40% of exports. In these countries, Russian imports in value terms fell by 44%, and exports grew by 8%.

Growth of military expenses

The expenses of the Russian budget on the National Defense section in April 2022 in nominal terms increased by almost 2.5 times, or by 130% (almost 630 billion rubles against 275 billion rubles in April 2021). According to the articles of the defense budget section, expenses on the armed forces, mobilization training, nuclear weapons and more are financed. Thus, in April for military needs, the Russian state spent 21 billion rubles of budget funds every day.

In total, in January -April of the current year, for military articles, 1.681 trillion rubles of budget funds were used up, and due to a sharp increase in expenses in April, the financing of National Defense is ahead of 43.6% to an updated annual plan.

Real military expenses of Russia are always higher than officially published. Significant funds for the needs of the army are going on “peaceful” articles: for example, the acquisition of vehicles for troops and subsidies to the defense industry enterprises are funded from the National Economy section, the costs of which in April 2022 increased by 55% in annual terms. The costs of the Social Policy section in April increased by 54% (843.7 billion rubles against 545.9 billion rubles in April 2021).

China helps, but not free

The dramatic growth of the oil and gas dependence of the Russian budget looks especially dangerous against the background of the EU on the EU on the embargo on Russian oil. This week, the EU countries still could not agree with Hungary, and the sixth package of sanctions against Moscow remains blocked. If the Europeans still agree, then Russia is doubly threatened-also on Chinese buyers who perfectly understand the situation and already dictate their conditions.

In March-April, large Chinese companies approached the purchase of Russian oil with great care and refrained from signing new contracts-the entire growth of Russian sales in the country was in small “kerosene” refineries, and in transactions, cash and yuan were used. But this week several evidence appeared at once that China is gradually increasing the purchases of Russian oil.

• Reuters wrote about the “quiet”, but the record growth of Russian oil purchases with Chinese companies. In May, China will receive an average of 1.1 million barrels per day (against 750 thousand used in April and 800 thousand b/s on average in 2021). This is about 10% of the average daily oil production in Russia last year.
• In the procurement, not small refinery is the lead, but large Chinese state -owned companies - Unipec, the Sinopec trader, and Zhenhua Oil, the Norinco defense holding unit. Tanker transportation is provided by the Hong Kong Livna Shipping.
• The increase in China imports began back in April, Bloomberg clarifies . And China is buying not only oil. Judging by Chinese customs statistics, in April the purchases of Russian oil, LNG and coal grew by 75% in monetary terms - to $ 6.4 billion.
• Oil imports grew even in physical terms - by 4% of the year, to 6.55 million tons, according to this indicator, Russia lost only Saudi Arabia. The supply of LNG from Russia to China jumped by 80%, to 463 thousand tons, with a total decrease in liquefied fuel imports by a third. The import of energy coal fell by 14%, to 3.8 million tons, but the coke has grown more than half, to 1.7 million tons.
• And this is not all: now China is thinking of buying cheap Russian oil in strategic reserves, Bloomberg recognized . Negotiations about this are carried out at the state level with a small direct participation of oil companies. China does not disclose data on the volume of these reserves, but taking into account commercial storages, it approaches 1 billion barrels. According to the agency, about 6% of this volume are free.

But the readiness of Chinese companies to risk secondary sanctions of the United States may not be eternal, but for now it is - it is far from free. According to Reuters, a discount on Russian oil in China is now about $ 29 per barrel compared to spot prices before the start of the “special operation”. This means that the “Chinese” spare price for the Urals barrel is now below $ 70 - by $ 10 below even the current European price with a sanctions discount.

What am I to me?

Even if the EU oil embargo is not approved now, Europe is guaranteed to refuse Russian oil on the horizon of several years. And if the situation does not change, Russia will be in an unenviable position - with an increased dependence on oil and gas revenues, tied to one buyer, who is able to use its monopoly position without any hesitation.

"Military operation"

The main thing in a week

• Almost three months after the start of the “special operation”, the Russian Ministry of Defense finally could report on the final capture of Mariupol. The Ukrainian military from the Azov regiment and the 36th Marine Corps brigade left the Azovstal plant, which was defended a month and a half after the Russian troops captured, and surrendered (the Ukrainian side calls the event an evacuation and explains it with the desire to maintain the lives of the defenders of Azovstali).
• The Russian side claims that more than 2.4 thousand people surrendered to the Azovstal, although Western military analysts believe that this figure may be exaggerated. The wounded were transported to the hospital of the nearby Novoazovsk, and all the rest - to the former pre -trial detention center in the village of Eleenovka, Donetsk region. The Deputy Prime Minister of Ukraine Irina Vereshchuk stated that the prisoners from Azovstal would be exchanged, but the Russian side did not declare anything about such plans. On the contrary, the day after the release of the first fighters from the plant, the State Duma speaker Vyacheslav Volodin proposed introducing a legislative ban on the exchange of “Nazi criminals”, and the Vice-Speaker of the State Duma, without five minutes, the leader of the LDPR and a member of the Russian delegation in negotiations with Ukraine Leonid Slutsky- cancel the moratorium on the death penalty for them. However, the deputy of the Verkhovna Rada, who participated in the negotiations, Kira Rudik on Tuesday said that the Ukrainian side received guarantees of the UN and the Red Cross, that with prisoners in the Russian territory “everything is in order”.
• But the significance of Mariupol and Azovstal was rather symbolic - the main events are now taking place in the west of the Luhansk region, where Russian troops are trying to close the encirclement around the cities controlled by Ukraine of Severodonetsk and Lisichansk. This is only part of the initial plan of the “second phase of the special operation”, which suggested the environment of a large Ukrainian group in the Donbass, but in the near future it remains for Russia the maximum program is considered by Western military analysts. In the Kharkov region, Russian troops completely retreated to the border, and in the south of Ukraine there are no active hostilities.
• Events are unlikely to develop quickly - the fighting in the Donbass since April has become protracted, and the main role in them has been played by artillery shelling of fortified positions.

Recession-2022

Macrodrogenoses festival

This week, the Ministry of Economy introduced the scenario conditions for its macro -drift for 2022–2025 in the basic and conservative options (the website of the Ministry does not open with the VPN).

• The fall of GDP in the basic scenario in 2022 will be 7.8% (the exact repetition of the record in the 21st century of the fall of 2009), and the annual inflation is 17.5%, in conservative - 8.8% and 16.5%, respectively. “For the first time in modern history, we enter the recession at a high level of prices for raw materials,” said the representative of the ministry in a conversation with RBC.
• In the basic script, the real disposable income of Russians will fall by 6.8%, in conservative - by 7.4%.
• Export in real terms will be reduced in 2022 by 14% in the base and 22% in a conservative scenario.
• The price of Russian Urals oil in the basic script will be $ 80.1 per barrel and a ruble exchange rate - 76.7 rubles/$, in the conservative - $ 78.6 per barrel and 78 rubles. Course, respectively.

In general, the parameters of the Ministry of Economic Development look realistic, Dmitry Poleva, Director of Loko-Invest Investments, told The Bell. The scale of the fall of GDP in depth and duration is more reminiscent of the second half of the 90s-a deep fall and slow restoration, if you focus on the total GDP growth in the previous 4 years (in the last crises-2008 and 2014-the economy was restored much faster), he warns.

The conservative scenario of the Ministry of Economic Development looks more realistic than the basic, especially by hydrocarbons, told Vedomosti the chief economist of VEB.rf Andrei Klepach. But even in it, the main figures are better than many foreign assessments: the Institute of International Finance predicted the drop in Russia's GDP this year by 15%, the World Bank - by 11.2%.

The assistant to Vladimir Putin Maxim Oreshkin showed himself much more optimist. On Thursday, he made the most positive economic forecast so far: the fall of Russia's GDP this year will not exceed 5%, and inflation - 15%. The forecast, however, was made at an event where optimism was laid - the New Horizons forum organized by the Revived Society “Knowledge”, the most important project of Oreshkin’s colleague for AP Sergey Kiriyenko.

The Central Bank believes that the time for optimism in economic forecasts has not yet come: even if the latest statistics show that the situation in the economy is developing a little better than it was presented a month ago, but in a number of industries there is a deterioration in the situation and risk strengthening. “To draw conclusions now that the deviation from the basic forecast is going up, in my opinion, for now, prematurely,” said Cyril Tremasov, director of the Bank of Russia Department (DCP) of the Bank of Russia. The last basic forecast of the Central Bank, presented at the end of April, provides a range of GDP falling 8-10%, and inflation for the year - 18–23%.

In fact, the difference in forecasts is now quite difficult to comment on an outside observer - factors affecting the forecast in 2022, an order of magnitude larger than at the usual time, the chief macroanalist of Raiffeisenbank Stanislav Murashov thinks. For example, earlier the difference in general could be explained by the difference in the price of oil and the ruble exchange rate, today, for example, the prerequisites for reducing export and imports (if we are talking about GDP) or seriously the upcoming deficiency of imported goods (if we are talking about inflation) continues. If we assume that the deficit of goods will be outweighed by the effect of weak demand - then your forecast will be more optimistic than the one who believes that the deficit will play a determining role, Murashov notes.

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INTERVIEW

Economist Branco Milanovich - about the causes and consequences of war

Branko Milanovich-professor of the city University of New York and the London School of Economics, one of the main world specialists in global inequality. After the outbreak of war, he became one of the closest observers of Russia among world economists - Milanovich reads the Russian media and almost daily comments on the situation on Twitter .

Russia, as Milanovich noted in the preface to the Russian publication of his book “Global Inequality” in 2016, is one of the five most unequal countries in the world. Milanovich connects such a high level of inequality with the post-communist transit of the 1990s, when many representatives of the middle class, including from among state employees, lost in income. At the same time, the situation of the middle class in the country is extremely important for stability in society, the economist pointed out.

Now it is the middle class along with the poorest sections of the population that will suffer the main losses because of the war in Russia, Milanovich believes. At the same time, hoping for import substitution or new industrialization is not worth it. The country has an unprecedented experiment in which it will try to keep the economy with the help of “regressive” import substitution, that is, the transition to outdated technologies and downshifting of highly qualified personnel.

About what the economy will be capable of under sanctions, what will happen when it opens, how inequality manifests itself in the war and why the elites were not able to contrast anything, read in our interview .

Stories

What is known about the buyer of the Russian McDonald's

Новым владельцем российского бизнеса уходящего из страны McDonald's, как и предсказывал The Bell, на этой неделе стал экс-совладелец компании «Южкузбассуголь» Александр Говор. Его карьера — хрестоматийна для российского капитализма последних десятилетий. He had to part with the first coal business in the mid-2000s-after two accidents, as a result of which 148 miners died. Теперь Говор — владелец нефтеперерабатывающего завода в родной Кемеровской области, а его сын, долгое время управлявший остальными бизнесами отца, — депутат кемеровского заксобрания от «Единой России» (биография Говора-старшего заслуживает того, чтобы прочитать ее целиком ). Новый владелец будет развивать российский бизнес McDonald's под другим брендом. The buyer pledged to save the staff of the restaurant network, without changing working conditions for at least two years, pay for the salaries of employees of the McDonald's corporate office in Russia until its final closure, as well as fulfill all obligations to suppliers and owners of the premises.

INVESTMENTS

Потерянные годы доходности

The Russian military operation in Ukraine threatens to turn into a protracted conflict. И инвесторы с этим, похоже, уже смирились. В апреле-мае их внимание снова переключилось на инфляцию в США и ставки ФРC: если в марте 44% управляющих, опрошенных Bank of America, считали войну главным риском для рынков и мировой экономики, то уже в апреле — только 16%, а в списке рисков война переместилась на 4-ю строчку. The markets believe that the war will have a local value, said Bloomberg editor John Oters in April. Но если она затянется на месяцы или даже годы, ее влияние будет куда более значительным: для рынков это будет означать годы потерянной доходности, более высокую инфляцию и ставки в развитых странах, замедление роста техногигантов и миграцию инвесторов на рынке частного капитала. О том, какие долгосрочные последствия такой сценарий будет иметь для рынков, подробно рассказываем здесь .