Enes
Moscow
WINNER OF THE RF MINSTROY MEDIA COMPETITION 2016
Go to mobile

LATEST NEWS

16:54 28-04-2017
Austrian OMV to purchase additional volumes of gas from Gazprom
16:26 28-04-2017
Rosatom and Slovakia negotiate spent nuclear fuel reprocessing
15:54 28-04-2017
Monument to first President of Vietnam to be erected in Russia
15:35 28-04-2017
Californian scientists push for establishing bricks production on Mars
15:14 28-04-2017
Raven Russia buys from Finns two business centers in St. Petersburg
14:45 28-04-2017
Radiological center to be built in Moscow region
14:19 28-04-2017
Austria invites Putin to mark 50th anniversary of cooperation with Gazprom
13:50 28-04-2017
Russian scientists invent new heavy-duty polymer
13:25 28-04-2017
Son of Russian Prosecutor General to engage in construction in Crimea
12:28 28-04-2017
Russia ready to assist Japan in rebuilding Fukushima NPP, Putin says
12:14 28-04-2017
Hungary built second fence from migrants on Serbia’s border
11:25 28-04-2017
Gazprom to receive permits for Nord Stream 2 by mid-2018
11:03 28-04-2017
Investment in Yamal LNG project reached $23.4 bn
10:47 28-04-2017
Japanese might take part in preparation of Arctic LNG 2 project
10:18 28-04-2017
Russia allocates $1,4bn to support its manufacturing industry
09:59 28-04-2017
RDIF and JBIC determine mechanism of Russian-Japanese Investment Fund
09:41 28-04-2017
World’s largest shipyard to be completed in China soon
17:52 27-04-2017
Russian Rosnano and Finnish Fortum set up $530m wind power fund
17:32 27-04-2017
$2m motorway to be built in Russian city of Volgograd
17:08 27-04-2017
Start of Turkish Stream pipe laying scheduled for this summer
16:52 27-04-2017
$1,4m bridge across Don River to be erected in Russia
16:36 27-04-2017
Innovative medical cluster to be built in Russian North Caucasus
16:20 27-04-2017
Austrian building group Strabag increases its net profit by 55%
16:02 27-04-2017
“Branded” trains to be launched in Moscow region by 2018 World Cup
15:44 27-04-2017
Spaniards prepare reconstruction project for Russia-Georgia’s only road
15:22 27-04-2017
PGNiG files claim against Gazprom over antitrust law violation
14:46 27-04-2017
Chilean becomes first architect to win Gothenburg Prize
14:22 27-04-2017
Uber launches flying taxi by 2020
13:44 27-04-2017
Gazprom files €730m counter-claim against Italian Saipem
12:32 27-04-2017
China allocates over 6bn yuan to building e-vehicle factories
All news

ARCHIVE NEWS

«    April 2017    »
MonTueWedThuFriSatSun
 12
3456789
10111213141516
17181920212223
24252627282930

The rouble rate: to fly up or to land?

logo russianconstruction.com
The rouble rate: to fly up or to land?

Konstantin Ordov, Professor of the Russian University of Economics named after G. Plekhanov

Famous Russian writer Maxim Gorky was absolutely right saying, “The one born to crawl cannot fly!” meaning, “If God had meant us to fly he'd have given us wings”. The task of the Ministry of Finance is to make both ends meet, but is it right to think only about the current day? 

Somebody may object and say that the finance ministry is thinking of the future and worries about Russian people’s fate, but they will be mistaken. The Ministry of Finance worries only about the sphere of its direct responsibilities, with respect to balancing the budget’s incomes and expenses, and in this there is more passion than in Shakespeare’s Othello…

In its enthusiasm about looking after the budget the ministry has become unscrupulous and tries to catch the initiative of the exchange rate regime. As such, it may cancel the CB’s "scorched-earth" policy, having sacrificed a significant percentage of economic growth, jobs and crisis overcoming for an inflation decrease.

We have never seen such a long recession in the history of Russia and all of this sacrifice may turn out to be in vain. The state institution is trying to blur the responsibility for the currency steadiness assigned to the Bank of Russia.

It is very easy to find irresponsible solutions with the following logic: we do not need less than 60 roub. for  $1, but if we do not want to spend the Reserve Fund we’ll have 65 roub. for за $1, and if nobody objects at 75 roubles for $1and higher we’ll be able to run a balanced budget.

Does everybody remember “The Song of the Falcon” and the experiments of one of the characters, the Grass Snake? On falling from a rock he laughed and said, “Well, here’s the beauty of flying in the sky! It is in falling down!”

Well, in fact, the Ministry of Finance sees its participation only in falling.

Does everybody understand what it will result in? Decline in the living standard, expensive credits and mortgages (the CB will not dare to decrease the rates soon), and inflation (the import volume grew faster than the export one, and we shall feel this in our pockets), the growth of which will kill the last hope of Russian producers for equal conditions with foreign competitors.

Are there any alternative variants? Alas, it does not seem like it. One should not fall into a fantasy whereby the strengthening of the rouble is due to the representatives of the government economic bloc. It is not. The share of profiteering of the foreign participants of the exchange market has grown more than two-fold. Additionally, the majority of these people are ready to leave Russia as soon as we cease giving them the opportunity to earn at least 50% (which is comparable with the profitability of the currency according to the RTS Index in 2016).

I would not like to believe that the Ministry of Finance may serve as a detonator of the following stage of the economic crisis, but it cannot be not ruled out. In case the scenario turns out to be far from the ministry’s anticipations, 80 roubles for $1 will not be the limit.

The game is over. A balanced and careful policy of the Ministry of Finance, the Central Bank and the Ministry of Economic Development is needed. The reserves are running out, and so is Russian citizens’ money.

We have no more opportunity to crawl. Let us fly up together.

Related publications

PARTNERS

UP