Uh-oh..... story here at a local from CNN.
The gaping hole in Russia's budget is growing, and may force President Vladimir Putin to make much deeper cuts in government spending.
Minister Anton Siluanov said Wednesday the country could lose three trillion rubles ($45 billion) in revenue this year if oil prices stay around $50 per barrel.
Siluanov said the government must face up to the new reality and adopt even more austerity measures.
He proposed 10% cuts across all government departments, except defense. That is double the 5% cuts ordered by Putin in December.
Speaking in Moscow, Siluanov said cuts are the only way to solve the crisis.
He warned increased borrowing from the central bank could push the country into an "inflationary spiral."LOL! It's like the Peterson morons have just completed a speaking tour of Russia and the Russian leadership has substituted the Peterson kool-aid for their regular vodka.... TIP: Go back to the vodka, preferably Russian domestic produced brands.
Hey Anton, why not start thinking about raising interest rates from the current 17% while you're at it...
I have more analysis to do but if they increase across the board cuts ex-defense to 10% it will probably nullify any fiscal support currently being provided by the high interest rates... would be bearish for Russian equities.
6 comments:
Un-fucking-real. How do you get one of these jobs??
UFB Mike.... looks like the entire planet earth is being ruled by morons at present....
In this case, if one is long Russia equities ;) lets hope "talk is cheap" and they dont end up going thru with it... and leave the rates at 17%...
The gal at the Russia CB was recently talking about increased infrastructure spending... so who knows may be like the US and this is politics talking here...
Maybe Putler wants to be seen as a fiscal conservative... thinks it makes him look better... at least on paper...
Gotta try to find some data on Russia federal spending levels and see what at least Putie-poots 5% cuts would represent...
Pre rouble de-val Russia had $235B of public debt at 17% interest that is like $40B+ in USD terms... if these 5% topline cuts exceed this $40B then it is a net fiscal F-up....
See what I can dig up over the next few days...
rsp,
They drank the cool aid after the fall of the USSR and the introduction of neoliberalism, which near buried them when they pitched Marxism and not knowing better bought into Western mainstream economics, just like the up and comers in China, India, Brazil, etc. are doing. You'd think they would have learned better when Jeff Sachs et al nearly drove them under, other than the oligarchs.
The advice of the US advisers was to privatize everything quickly regardless (seize the time) and let the market sort it out later. Damn near blew up the society and resulted in the Russian mafia they are still contending with. At least Putin halted the takeover, but it's still not reversed.
Putin did get one thing right when he said that everything the US touches turns to shit. He should have added — except for the oligarchs.
However, they may not be total morons. For example, in jacking up the policy rate, the cb are also providing lower rate loans to firms. I guess they learned a few things from the Fed about using special facilities in emergencies. If there are smart, they can fund themselves directly using the cb, while still looking "respectable" fiscally. They can probably get some pointers from the PBOC, too.
Tom,
this is like watching the chimpanzee cage at the zoo and taking bets on which one finds the banana behind the rock....
You give these people way too much credit...
rsp,
Matt, I am reminded of China. Western analysts have been predicting a China blow up for years and it never happens. In addition, China emerged from the GFC much more quickly that others because it understood how to use stimulus. Also, Western analysts complain about China using the PBOC to conceal fiscal ops off the books. Maybe these people aren't all morons.
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