The former head of the Russian Finance Ministry told about trying to rescue the Bank, meaning increasing the retirement age and support costs, Syria
The head of the "Committee of civil initiatives" Alexei Kudrin, in contrast to the current leaders of the Executive power of the RUSSIAN FEDERATION, believes that the peak of the problems in the economy have not yet passed since the Government has not enacted comprehensive anti-crisis measures. However, the former Finance Minister is limited to advice to the Cabinet and does not comment on his possible return to power. While Kudrin politically indifferenten, although it believed that Russia lacks a strong opposition party and a fierce political debate. On the situation in the politics and economy of RUSSIA Alexei Kudrin spoke with Interfax browsers Rodion Roms and Andrei Novikov.
-President Putin during his recent press conference, when asked about the situation in the economy, said the anecdote about the alternation of black and white stripes-"appears, then it was white". The fall of the economy this year is approaching 4% worse with investments, with a turnover of retail trade. While there are such an opinion that actually some sort of restructuring occurs, growing exports in those sectors, which used to export, but with the weakening of the ruble became more competitive. As you look at the current situation in the economy and the prospects for next year?
-Some time ago many experts, and I also felt that we had reached the bottom, or, as they say, passed the peak of the crisis. But today we see some further deterioration, which already shows us in November. This means that the situation remains fragile and yet, plus added an even more serious problem is the sharp decline in oil prices. If the price will remain at this level for another six months or a year, we will further decline of the economy.
Thus, we cannot say that the peak of the problem passed. Next year brings a serious challenge. Decline in public spending, it is inevitable, because revenue will be less. The devaluation had not yet shifted its entire force on consumer prices, inflation next year would be about 1.5 percentage points above expected official forecast of 6.4%. All this is fraught with high-stakes credits, conservation risks across a range of sectors, both for production and employment, profit, risk a new wave of defaulting on debts. And now the situation is not very good, but let's put it this way, as long as it is stable, with the exception of certain banks or individual industries. But it could get worse.
Yes, individual enterprises increased production is we are seeing, especially in export industries, the situation is better because the devaluation has played its role. Part of manufactures, oriented to the domestic market, too, feels better because the devaluation made it difficult to import, had a niche market. In principle, everyone expected more reaction to the devaluation as the industry some protection from competition and the ability to expand production.
But, first, we have, unlike 1998, when GDP had been underutilized capacity and after the devaluation grew by 10%, there is no large open spaces, so quickly and dramatically devalued will not. We have no additional labor. The crisis part of migrants left the country because their dollar earnings declined significantly. In this connection, we have serious free resources for a strong expansion. We have for the first time in many years there has been a serious drop in real incomes that lowers consumption. Even now, on new year's Eve demand far less compared to last December. In some regions-15%,-30% on. This all puts growth. But it's a short-term effect. While he rather negative than positive.
Very alarming that virtually no investments grow, though enterprises have a free resources: there is a growing volume of funds on accounts at banks. Increase residue deposits in the accounts of the banks amounted to over 11 months of this year, almost 16%, and the growth of enterprises-7.6%. This is a resource for investment, which is not used.
It is said that proposals to add money to the economy are completely untrue: the money is in the accounts, i.e. they have banks, and banks are afraid of them invest. Because very large risks in the economy.
I heard with surprise: the Government believes that the anti-crisis program was largely neutralized external risks. This is not the case with this unacceptable. Yes, anti-crisis measures, maybe rush problems removed, agree, and especially in the banking sector, they have played a key role. However, the fall in investment and real income of the population turned out to be significant. The State had more to do in part to simplify management, improve economic productivity and reduce costs for business. Devaluation of its part of the "work" done, but the State also should facilitate, not to promote individual payments. Truckers-the most obvious example, but it happens on all fares on all services where the State regulates or involved.
Now discusses the new tariffs for next year: if they be indexed more than 5-7%-this business again hit. This means that all will remain in the zone of such risks when no one wants to invest. Shortage of investment in the economy, which means that in the coming years, three to five years, we will have very slow growth.
-In crisis budget money goes to support Crimea, Donbass, military operation in Syria. Our economy enough safety margin?
-Crimea, definitely worth the money. According to my estimates, it costs about $ 200 billion more a year. And here are the costs of operation in Syria are not very large. For example, cruise missiles, that Russian positions produce OLG IGIL, still shooting back would be on exercises. Another thing, the cost of the defense as a whole. Bookmark two new submarines, of which I have read recently, maybe require money in annual figures more than Syrian conflict. There is a need to build them today? I do not know. But speaking about the participation of Russia in Syrian developments cannot be discounted further, more serious than ever before, the risks of unintended incidents that could worsen our relations with partner countries and Russia.
In Syria, the armed forces are involved in many States, with whom we have established economic cooperation. History of Russian aircraft had been shot down by Turkey, has shown how these costs are significant. Risks of unabated. On the contrary, they are likely to increase, and this factor account for investors who are becoming more conservative.
-In this case, the game is worth the candle in Syria?
-Economic costs, certainly is. And will participate in the Syrian political conflict in Russia, despite the economic price that we will pay for it, I'm not going to comment. This requires an in-depth analysis of strategic winnings of the Russian Federation.
-The Russian leadership has repeatedly stated that the sanctions method for solving inter-State problems. Prohibitive measures against Turkey were adequate?
-Russia has changed its position on sanctions. My opinion on the issue remains unchanged: I am in principle against the economic sanctions-against both Russia and Turkey. I believe, after the attack on the Su-24 had to limit itself to political demaršami against Ankara. Restrict economic relations is not worth it, because from this suffering and Russian business: not receiving spare parts for Russian industry, leaving construction workers. Recently met with entrepreneurs, one says: I have a few days before the completion of the construction, and forced me to take out Turkish workers, quickly replace them I can't, and I have responsibility for credit, on penalties. This is a very serious hits on Russian business.
Change the rules of the game is always a deteriorating economy institutions. The Institute is an essential today that there is a world market. Today, countries compete not potato production volume and not even the release of electronic chips and institutes which all time will generate and update your production. Open communications with the leading States, particularly with its neighbors, is always a factor in additional growth of their country.
The theory of a protectionist barrier to limit imports, because this will make more themselves, today, is flawed. The most effective interaction with the leading countries in openness: we import the best from others. A natural regulator is the exchange rate. That's why I have a negative attitude to sanctions vis-à-vis other countries. The only thing that was done correctly-measures to ensure the safety of Russian tourists.
-You could say about the fallacy of sanctions the President. You still meet with him tete-a-tete?
-Met with the President in August and in October. We talked about the economy.
-And what you told him?
-Such meetings not made comment.
-In addition, a significant negative impact on the economy has corruption. What is the "vzâtkoemkost′" of the Russian State system, for example, as a percentage of the amount of State contract?
-Don't know exactly the average of some contracts is 10%, and for whatever reaches 40-50%. These are peer reviews.
-Do you think that the Prosecutor General Yury Chaika had to resign after the publication of the investigation about the business his sons?
-Do not believe that an official who cast a shadow must in any case to resign. Because media can slander and the person that already has happened with our politicians. But published facts require public scrutiny. Incriminating information against such figures as Prosecutor General, the head of the investigative Committee, in a Word, the civil servants involved in enforcement, should check the profile committees of Parliament. As far as I know, the Council of the Federation intends to consider the appeal Fund to fight corruption against Yuri Chayka.
Nevertheless, it is clear that officials must not be outside criticism of the parties, public organizations and political parties. You will not regret about the lack of a serious player on the Liberal flank?
-Political competition in our country podmorožena. In public and some private entities not welcome the participation of members in political actions, especially if they are related to criticism of the authorities. People are just afraid of engaging in opposition activities. While criticism of the political debate will not become normal practice, we will not see a full Liberal Party. This is a major drawback of the Russian political system. Ultimately, this means that there is no feedback from society and the preservation of ineffective State institutions.
2016 year comes, elections to the State Duma. Will you in any capacity to participate in them?
-I will not participate in the elections, will not endorse any party. While not planning to support any individual candidates. Nevertheless, the work led by me "Committee of civil initiatives linked to the examination of key events and the most pressing problems in the country. I do not exclude that our materials will be of interest to private parties. Actually, for this we work. In this sense we will indirectly influence on political processes. But it's not going to be addressed to specific politicians or parties.
-And if you look in the year 2018, any presidential term, in your opinion, is the best for Russia?
-Five-year-old. Two to five.
-President gave a positive assessment to the Government. Goes, your chances of return to power are melting?
-Categories-high chance or not-does not operate. I did not receive any relevant proposals.
-Recently appeared publication that you can go to work in the President's administration. Is this true?
Long do not comment on such matters.
-You, unlike the President, don't you think the Government's anti-crisis measures are sufficient. What is missing?
-The whole banking sector has received support at trillion rubles, and one State VEB, which itself should all help, will spend roughly the same amount, if not more. That is, the State is not helping the banking sector, and its bank, which itself meets is just an example of when the injury happened more than good for the entire sector. Repeat: trillion for the banking sector is a very important stabilizing moment. But its own actions, such as the State structure, proved to be more expensive. We reallocate the portion of GDP from one direction to another, with effective on ineffective.
Where will this trillion for Bank? It's all words, that this is just the bonds, in fact they still at the expense of taxpayers. It means that the money were taken and not spent, for example, on the road. The assertion that this is a purely conditional cashless bonds. If there is a FEDERAL, there is security then it is and you need to collect the money. In theory, the money you can build roads. But we are saving the WEB, that is, with some areas, reallocate to other less effective, as it kills growth.
If we have created these inefficiencies in State-owned companies, additional subsidies back kill growth. If we are constantly accumulating a pension freeze, we reduce the flow of money to the investment market of more than 300 billion rubles per year.
Any steps reduce the investment potential of the regions. Over the past five years, the actors at 2% reduced investments in its infrastructure. And articles related to wages and social costs. It is all irrational actions, they do not lead to an increase in GDP. If we took opposite decisions in these areas would feed growth. That is why I believe that the Government not everywhere operates efficiently. These actions are totally inadequate. All rather chaotic. Everyone assumed that the oil price will be $ 50, and it will be below-and this means that we will see some new random decisions. For example, or a substantial reduction of public expenditure in certain sectors, or raising taxes. We have a potential shortfall of income- -1.7 1.5 trillion rubles, this amount fit all education, health and roads at the expense of the federal budget. This scale.
-We talked about Turkey. If the transfer crisis in our relationship to the language of Economics, it will likely cost somewhere in the order of 0.5 percent inflation item now shows that the influence of this factor is.
-There are Turkey, is "Plato", with its inflationary risks, there is the situation with oil, which is fraught with further devaluation, which also airs in prices, there are factors which, as you said, we may still not know. Against this backdrop, the CENTRAL BANK gives preference to contain inflation, when taking decisions on monetary policy. It does not seem that this situation will change soon: inflation risks will remain strong and the CENTRAL BANK will be forced to take this into account. Accordingly, the rate drops significantly, and investment process will continue under pressure this bet. How do you feel when this situation may change and when credit resources may become more accessible?
-As I have already said, funds in the accounts of banks are there, but they have not invested because of the risks. If the Central Bank begins to issue additional shares or loosening policy, this will lead to further weakening of the ruble. The money will simply be transferred to the currency in anticipation of devaluation on the falling oil price. During the fall of oil prices give more money into the economy quite irrationally, two thirds goes immediately into the currency. And maybe three quarters. There are examples of how this happened in the same moments. And we have in other countries.
That is why those who say: let us alleviate policy in spite of the fact that price falls, despite the risks of high inflation, behave irrationally, it is more likely to hit growth, than cause it. Give 500 billion rubles, of which only a quarter could provide growth. Three quarters would work against growth. Maybe not against growth, but not exactly.
A further devaluation again increases the risks of importing components, the fall in consumption. And additional, oddly enough, the fall of production in a broad range of industries. When you are finished with the drop in oil prices when all will be calm, only then will it be possible to add a little bit of money in the economy. And that is only if conditions are other factors associated with increased demand for investment, for example, lowering costs for business. The demand must somehow stabilize and start slowly, quietly grow. Then you can add money to the economy.
-You mentioned the risks of budget revenue shortfalls next year. Whether we can partially solve this problem by increasing the amount of debt? And can we do that without raising the price of too much debt service? And whether there are markets where we can now attract such large amounts? As far as Asia from this viewpoint the Assistant?
-World market virtually closed to us-they are expensive anyway. Or generally will not give, or too expensive. Whole categories of investors in General will not participate in the purchase of our risk. Means will participate the most speculative, high premiums. This time.
But the foreign market has never been our primary source of borrowing. The following year, planned a serious increase in borrowing, pure attraction on the domestic market with 80 to 300 billion rubles. That would be a serious blow to the market, rates will rise. And this is a new indicator for the market, including for private loans, and they also rise. Its public debt on the part of the resources that have yet to go into investment, that is, the budget will be pulling funds out of the economy. Many in the private sector will not be able to take. It also works against growth.
The Government should just take items that reduce growth, and items that increase growth. Here are buildup reduces government borrowing growth, this is a known rule.
-If you are asked what to do with VÈBom-not in terms of its repayment commitments (it is clear that in one way or another, some solution will be found), namely in terms of the future of it as a structure, as a Development Bank. Which scenario you would advise those who decides?
-I believe that the WEB can stay. No need to purchase assets or withdraw from it bad debts, let the WEB itself and works with bad debts. But it must make a new command. That is, I am in favour of the change of Management Bank. The old team is the harder it will be to make because of their involvement in these projects, in bad loans, so to say-there is a conflict of interests in this part. It is supposed to do a completely new team.
There are additional capitalization issue price. I think this question should be tackled with new leadership. This must be a responsible, reputable people, with whom however the Finance Ministry should prepare a program of recovery. Then we figure out how much this program actually worth-500 billion, or 700 trillion rubles.
-Means, and with the new supervisory board? Because, apparently, the Supervisory Board must also then bear their share of responsibility.
-I would have completely changed the Supervisory Board. Can, and would leave the head of the Supervisory Board of Premiere, this issue is not as critical (although I am opposed to the Chairmen of the Government headed by the supervisory boards of commercial structures in General, and by the way, when the Supervisory Board was formed, was against this model). But I would have significantly restricted the number of Ministers there. That is, consider the WEB as such a model state company.
-That is, with independent directors including?
-Yes, and later with the sale of a substantial package on the market, with privatization. In the first phase-25 plus one share. When the State potratilos′ at correcting the situation, and when the Bank got to his feet and begins again to increase their opportunities, I'd be sold on this a growth package, thereby partially compensating the public costs. Partly this is completely impossible.
-But will he be able to then remain development institution still investors, probably not very interesting global tasks of a public nature? They need clear, transparent business model that many projects did not fit, which, in theory, the WEB must implement.
-This is a good conversation. The fact of the matter is that I am against the unprofitable projects. Times. Institute for development cannot be negative value and capital. If he deliberately planned to unprofitable projects, it's shoddy Institute, in the long term it is bankrupt. This should not be.
The average commercial bank credits for projects 2-3 years, very rarely-in 3-5 years. Due to the risks associated with market inflation, devaluation, other costs, change the rules. Such as bank VEB, can have more resources from the quasi-public sources, NWF, cheap loans under the guarantee. He has a slightly lower cost of resources, and it can give for the longer term. And if happen any other risks, the State may subsidize a bid or other things. This does not mean that the Bank should be unprofitable.
In this regard, the term private investors could be. Just another range of tools-more Government, more gosučastiâ, a partial subsidy.
-Another question, knotted at the electoral cycle, question your agenda else Ministerial: what do you think, is there any chance that until 2018 year we discuss the inevitability of increasing retirement age still to some specific steps will come? Or already have to think about the next political cycle?
-The vital need for this long has come, and say that we do not need it or maybe it isn't justified-all this milestone. All already understand-it must be so, that, unfortunately, today already pay current pensioners are not getting full indexation. All those who said that the increase in the retirement age should be avoided, has already failed. Because we can't provide even the current indexing pensions to retirees.
Always say: it's better to ask for adult citizens, capable of work, another two years of work, but indexed pension for pensioners. What is the Government doing this already forced steps in situations where the necessary decisions had not been taken earlier.
This imbalance will grow. I have no idea what to do in 2017-2018. And there will be no money and how not to index pensions on the eve of the election, do not understand. And the scale of the necessary means big. This year, full indexing (actual size inflation year-2015) would require an additional 300 billion rubles. And such resources annually.
What is 300 billion rubles? It is half the total funding of higher education in the country in the year. That is, two years of indexing, you can "eat" all higher education. That's half the financing of roads in the country. Here is the scale of the events. When I say that it is necessary to raise the retirement age, I just understand the scale of the impact of this issue. By the way, with 2008 on 2015 years financing the pension system increased by 4 per cent of GDP, while we have all education takes 4.2% of GDP in the year 2015. And this is just extra money!
In this connection, the correct path is: President now declares that after the elections, with 2018 or 2019 year happens to raise the retirement age. All decisions are made now in 2016, for example, year. And this issue is farther removed from the agenda, with him as the country lives with reality.
Of course, the President will assume some of the burden, political responsibility. But, if you do this in the year 2016, the next will be easier. Give approximately 40% that it will indeed be done.
The country will decrease living standards, including State employees and retirees, if this is not done. Budget workers still working people and retirees are those to whom it is necessary to create conditions at all costs.
Finally, all now have probably heard that the issue of raising the age of retirement in the interests of pensioners.
-You in his time were at the beginnings of the Efsf, which is now divided into two parts. Then, as now, is spent in particular, NWF, you're comfortable with?
-NWF we have, in fact, already transformed into a replacement reserve fund. Although functionally they separated, at the expense of NWF was supposed to cover the long breaks in the pension system this time. In this sense, the NWF is likely in the near future will be spent.
Today it is also used as a source of money for long investment projects. Some of these projects, in my opinion, poorly justified or risky. NWF should, as you know, invest in high-quality projects. If we are talking about infrastructure bonds, a company that operates an object, building, should host a private issue, the market, and only the market output indicators should extend NWF, and it will be an open and transparent option. We will see if the market relied on these risks, whether they enough balanced. Today it is decide a few officials, rather than the market, so this type of investment is notoriously opaque and inherently risky, given weak practices long-term investments in infrastructure, in such objects.
Can say is ultrahazardous objects. In this connection, I suppose in advance of these resources will not return any circumstances again pushed back the timing of lead to cost projects and when will launch infrastructure, it turns out, for example, that there's no such traffic, or regular truckers say they will not pay for such fare. All these are the key risks of such infrastructure. And the State will compensate or restructure, and that additional safeguards resources again. That's why I think it may be, but infrastructure bonds substantially better developed and having the market story.
Recently we have in many areas has worsened relations with foreign partners, one of the strokes of this diverse paintings-tightening regulation of rating activities. The State got upset at foreign rating agencies for their steps in the year 2014 and did for them seriously. Now there is a good chance that we poproŝaemsâ with the "big three", which is easier to withdraw from Russia than to comply with the new requirements. On the other hand, we have, with the support of the CENTRAL BANK, a new Russian Agency, claiming the role of market leader. How do you think our financial market without foreign agencies will survive?
Of course, global rating agencies are professional enough and I trust their estimates. They also made big mistakes, system errors, especially in the period before the world financial crisis 2007-2009 biennium. Today, however, these problems are known, appropriate adjustments have been made to the regulation, any risk we have escaped, and before the formation of the new "invisible" risks, I completely trust the work of the agencies.
When the Agency is talking about country risks, usually they are not politicized. They reduced the ratings of the United States, and there is an investigation opened against them. They reduced assessment and European countries, lower and us, we too are unhappy. In this sense, they are hitting on all, and say that they are politicized or act on behalf of any group of States, I think it is not worth it. Risk assessment-this is their bread, they earn, they should warn in time. Repeat-Yes, they are sometimes. But as soon as the market will be a real reason to believe that these aren't ratings-they will lose a significant portion of their business, and maybe even disintegrate. They believe in the world, and they also try to be objective.
However, I do not exclude that need and Russian ratings, but acquire credibility by imposing impossible. Authoritative new agency can be many years, if it would be objectively and independently operate. Should be "credit history" to be in several major world agencies or regional. Now only the first steps in this direction, and the first results will be in three or four years. So we will pass this crisis without a significant impact of the new agency in any case.
-I.e., foreign agencies us early to say goodbye?
-Of course, and not sooner, and no need to. The farther we will enter into the global division of labour, the integration, the more we will use the services of international institutions, including ratings. Don't forget that all our companies are located in the international cooperation.