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    Russian Economy General News: #7

    George1
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    Post  George1 on Mon Apr 24, 2017 4:47 pm

    Russia's new export positions show steady growth, expert says

    Agriculture is one of the most important drivers of the Russian economy

    KRASNOYARSK, April 21. /TASS/. New and unconventional export positions for Russia, such as corn, soybeans, confectionery and chocolate, are demonstrating steady growth, President of the Center for Strategic Research (CSR) Pavel Kadochnikov said on Friday at the Krasnoyarsk Economic Forum (KEF).

    "New export positions emerged recently, such as corn. We normally exported it in the amount of $100 mln and the figure is $860 mln now. Soybeans and soy products export was $15-17 mln and became $330 mln in 2015 and $530 mln in 2016… We sold honey worth $14 mln in two years; confectionery and chocolate sales were $40 mln and $60 mln. These are sound export positions. They are growing and have sources and prospects," the expert said. Such Russian products like eggs and milk are also competitive on the global market, Kadochnikov said.

    The agriculture is one of the most important drivers of the Russian economy, the expert said. Furthermore, it is a high-technology export sector, he said. "Growth rates are impressive: 3.5% in 2014, 2.6% in 2015, and 4.8% in 2016," Kadochnikov added.

    Continuing development of the sector should be related to performance and technology development growth, growing competitiveness, sector development and products affordability balancing and export expansion, the analyst said.


    More:
    http://tass.com/economy/942610
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    Austin

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    Post  Austin on Tue Apr 25, 2017 5:01 pm

    Putin: Russian authorities will not abandon the floating exchange rate

    "It is important the stability of the national currency in a floating exchange rate conditions, and from him we give up not going, -. I want to make it clear, because we have too much of a risk, and if we go back and we will try to adjust the rate of non-market ways ... as far as the Central Bank and the government will be able to provide this stability, we look, "- Putin said at a meeting with representatives of business circles of the Yaroslavl region.


    Putin: The authorities are looking for market-based measures of influence on ruble

    "We understand that this is one of the key issues Believe me, doing this practice, I can say without any exaggeration, your concerns, we are also clear on a daily basis We have them all the time, too, are discussing are looking for options for market-based measures of influence on these processes...." - Putin said, responding to a question regarding the entrepreneur pereukrepleniya ruble.
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    Post  Austin on Tue Apr 25, 2017 5:04 pm

    Beats me why Russia needs Floating Rouble thats largely pegged against USD/Euro and Full Capital Account Convertibility ?

    Why does Russian Citizen need to convert Rouble to USD and vice verse ?


    My Country does not have a Floating Rupee the Central Bank pegs it against USD and nor do we have full capital account convertibility but we are doing quite well without both growing at 7 % and inflation at 5-6%


    Can some one explain how does Floating Rouble and Capital Account Convertibility helps ?
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    Post  Austin on Wed Apr 26, 2017 12:36 pm

    Western Sanctions Blowback: Russia Takes Another Economic Victory Lap

    http://russia-insider.com/en/its-official-western-sanctions-have-strengthened-and-diversified-russias-economy/ri19633
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    Post  Austin on Wed Apr 26, 2017 6:18 pm

    CB: Russian banks' profits in 2017 will be about 1 trillion rubles

    Подробнее на ТАСС:
    http://tass.ru/ekonomika/4213741
    max steel
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    Post  max steel on Wed Apr 26, 2017 8:59 pm

    Russian oil groups brave cold of western sanctions to explore Arctic

    Putin urges energy companies to develop know-how for drilling in the far north

    His fur coat heavy with snow and protecting him from temperatures of minus 18C, Igor Sechin, the chief executive of Russian oil company Rosneft, clutched the radio in his thick gloves and relayed to his engineers the simple order he had just been given by Russian President Vladimir Putin: “Start drilling.”

    A rig operator confirmed his request. Moments later, a drill began its 5,000m journey downwards, in search of oil deposits that the country is banking on to provide more than a quarter of its future output.

    Perched on the edge of a peninsula deep in the Arctic Circle, Tsentralno-Olginskaya-1 will be Russia’s northernmost oil well. Closer to the North Pole than to any city, it is a feat of engineering that uses equipment shipped 3,600km through icy waters navigable only for two months of the year.

    The well is one of the most technologically challenging ever attempted in Russia. With the deposits located beneath the icy, frequently frozen waters of the Laptev Sea, cutting-edge horizontal drilling techniques will be used to reach up to 15,000m from the main site.

    But it was also a moment of triumph for Mr Putin, who was beamed in via video conference from St Petersburg as Mr Sechin braved the frigid elements and who celebrated the start of drilling as an act of homegrown ingenuity. Three years ago, when the US and EU imposed sanctions on the country that restricted companies such as Rosneft from foreign capital and technology, complex wells were exactly the kind of ambitious projects that were supposed to be rendered impossible. Western governments hoped that pressure on Russia’s main energy companies would help change Mr Putin’s political calculations.

    But as projects like Tsentralno-Olginskaya-1 attest, Russia’s oil and gas majors have found ways to carry on regardless. “Horizontal drilling is a complex and high-tech operation. This is just the first well. There is much more work ahead,” Mr Putin told Mr Sechin in the heavily scripted conversation.

    The ability of the companies to overcome the impact of sanctions is critical for Russia’s economic future. Preliminary estimates suggest as much as 9.5bn tonnes of oil equivalent lie below the ice where Rosneft’s drill is headed. Experts believe Russia’s Arctic shelf region in total holds as much as $20tn worth of oil and gas, and will provide 20-30 per cent of its oil production by 2050. State-run Rosneft and Gazprom have been granted the sole rights to exploit it.

    “I would like to wish you good luck and I hope for this undertaking’s success,” Mr Putin said.Mr Sechin nodded. “We will keep you informed.”

    The US, EU and other western countries first imposed sanctions in March 2014 after Moscow invaded and annexed Crimea and provided military assistance to separatists fighting in the east of Ukraine. They targeted some of the country’s major banks, defence and oil and gas companies that are largely controlled by the Kremlin and are the country’s economic heartbeat.

    Foreign financing dried up, as banks pulled funding streams directly targeted by the sanctions, and took a safety-first approach to others as lawyers began to pore over the small print. International joint ventures came shuddering to a halt, and prospective investments were abandoned.

    “At the outset, a lot of companies were scared off from doing business with us or investing,” says a senior executive at the Gazprom group of state-run oil and gas companies. “The sanctions were brought in, and straight away the lawyers and compliance teams [at foreign companies] got way more powerful.”

    The sanctions remain firmly in place despite Donald Trump’s election as US president. Given that Mr Trump had called for closer relations with Russia and he appointed as his secretary of state Rex Tillerson, who in his previous role as chief executive of ExxonMobil signed an agreement worth $300bnto work with Rosneft in the Arctic, there was initial speculation that the sanctions could be diluted or removed. But given the scrutiny the Trump administration has received over its ties to Russian officials, the prospect of a shift in policy has diminished.

    Yet the penalties have not had a lasting impact. Sanctions may have caused some short-term headaches for the Russian economy — Rosneft requested more than Rbs2tn ($36bn) from a state bailout fund in October 2014 to meet foreign debt repayments. However, the much more important factor was the simultaneous crash in oil prices — a blow that is being partly reversed.

    As the price of oil sunk to decade lows, Russia pitched into recession: real gross domestic product fell 3.7 per cent in 2015 and 0.2 per cent last year. But over the past nine months, as the oil price has staged a mild recovery, Russia’s economy has done likewise. Even without any sanctions relief, GDP growth of about 1.5 per cent is forecast next year, according to the economy ministry.

    “There is a pretty uniform consensus that the oil price shock dwarfed the sanctions,” says Apurva Sanghi, lead economist for Russia at the World Bank in Moscow. “If you look at what the authorities have done over the past few years for macro stability, it has been pretty outstanding and the results are there to be seen.”


    At the same time, energy companies have found ways round the restrictions. Indeed, 2,000km south-west of Tsentralno-Olginskaya-1 in western Siberia, Gazprom Neft, Russia’s third-largest oil producer, is showing few ill effects.

    Late last year, it became the first Russian company to demonstrate shale oil fracking expertise with a 1km-long horizontal well 2.3km below ground at a site in the vast Bazhenov field, estimated to be the world’s largest shale oil deposit. Gazprom Neft was able to use homegrown technology that it was forced to develop after the sanctions prompted its international partners to walk away from the project. “We are like a snowball,” says Sergey Vakulenko, head of strategy and innovation at the company, a unit of gas giant Gazprom. “The harder you squeeze, the harder we get.”

    “In terms of today’s projects, we are not at all affected [by the sanctions],” he says in an interview at the company’s St Petersburg offices, where engineers use vast computer screens to remotely control drills at more than 600 wells across the country. “At their current configuration, they aren’t and won’t be painful, irrelevant of how long they are in place.”

    Between 2013 and 2016, Russian crude oil production rose almost 6 per cent, more than twice as much as the rise in combined output from the Opec group of countries. Revenues at the country’s three largest producers have risen 11 per cent in that period.

    The curtailment of foreign cash forced many to restructure their balance sheets with the help of domestic lenders, cut lossmaking or costly new projects, and increase their efficiency. Acquisitions and international expansion projects have followed.

    “The accepted narrative is that there is only upside risk from sanctions [being lifted] as the majority of the companies affected have shown few ill effects,” says the head of a western bank in Moscow. “In fact, lots of them have been forced to be smarter and have increased their competitiveness.”
    A $11bn agreement in December to sell 19.5 per cent of Rosneft to a consortium including Qatar’s sovereign wealth fund and Swiss commodities trader Glencore served two purposes for Mr Putin’s administration: it raised much-needed cash for the recession-battered budget, and sent a message to those who thought such a transaction impossible under the sanctions regime.

    The international oil and gas community is beginning to show a change of heart in response. In meetings with Russian energy ministry officials and company executives at a recent energy conference in Texas, sanctions were barely mentioned by delegates from European and US oil companies, two people present told the Financial Times.

    Gazprom Neft held talks with major oil services companies at the conference and expects to co-operate with them on upcoming projects, deputy chairman Vadim Yakovlev said last month. He estimates that just 1 per cent of Russian oil projects are affected by the sanctions, and that the “emotional” reaction among US or European energy companies to their imposition is receding.

    Russia’s energy companies still lag behind the technological might of their western rivals, and would be keen to restart the knowledge-sharing agreements and joint ventures terminated by the sanctions. Mr Sechin, whose good relations with Mr Tillerson helped seal ExxonMobil’s 2012 deal to develop Arctic deposits with Rosneft, says foreign partners could join his company in exploring the deposits targeted by the Tsentralno well, known as the Khatangsky block.

    “It is possible, we do not rule it out,” he says, without providing examples. “We can after some time work to attract a partner.”

    But isolated examples such as Tsentralno and Bazhenov have buoyed hopes in the industry that even if the restrictions remain, domestic expertise is advancing quickly enough to ensure future exploration and production.

    Gazprom Neft estimates that in-house technological advances since the sanctions were imposed have increased average production per well by about 11.5 per cent, and it extracted an additional 25.3m barrels last year thanks to deploying new techniques.

    Some experts even suggest that the majority of the projects hit by sanctions, such as the offshore Arctic deposits, are so technically challenging and expensive that they are not viable at current oil prices. If prices stay at current levels of about $55 a barrel, it could be some time before full exploitation of the Arctic shelf is profitable.

    “Sure, in terms of shale technology, we are a little behind the Americans. But in time, and definitely before we absolutely need to, we will get to where we need to be, sanctions or no sanctions,” says Mr Vakulenko.

    “We could do it now, but we don’t need to,” he adds, referring to even more complex fracking techniques that will be required to fully exploit the Bazhenov field’s 75bn barrels of estimated reserves. “Why go after the high-hanging fruit when there is lower stuff available right now?”


    The high-hanging fruit will be picked soon enough, given Moscow’s heavy reliance on keeping crude production and exports high to pay the bills.
    Mr Putin last month used a trip to the remote Franz Josef Land archipelago, the northernmost point in the eastern hemisphere, to reiterate his desire for development of the Arctic region.

    Following its drilling under the Laptev Sea, Rosneft will shift its exploratory work west, to the Barents Sea next year and the Kara Sea in 2019. The latter project was initially planned in conjunction with ExxonMobil, but Mr Sechin says the work will stay on schedule, sanctions or no sanctions.
    “It is important to demonstrate our consistency in dealing with partners,” a spokesman for the company said. “Sanctions may last for years, but business relationships last for decades.”

    --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    This must hurt like hell.Russian agriculture sector flourishes amid sanctions

    Agriculture has overtaken arms sales to become Russia’s second-biggest export sector

    When the EU and US imposed sanctions on parts of Russia’s economy following military intervention in Ukraine 2014, some local officials portrayed the blockade as an opportunity. Together with a falling rouble, they said, it would boost development of domestic business by encouraging import substitution and making exports more competitive.

    Many western analysts and investors were cynical. But in at least one area of the economy — agriculture and associated sectors — the optimism has been vindicated. Russia last year became the world’s biggest exporter of grains, at more than 34m tonnes. Total Russian grain production hit a record 119m tonnes. The turnround is striking since as recently as 15 years ago — and for a couple of decades before during the Soviet era — Russia was a net importer.

    The success goes beyond grain. Russia has fully substituted imports with domestic production of pork and chicken. It has become a top producer of sugar beet; greenhouse vegetable production last year was up 30 per cent on the year before.While agriculture remains far below oil and gas, the sector has overtaken arms sales to become Russia’s second-biggest exporter.

    In reality, western sanctions had little to do with this. The weaker rouble that helped boost exports and make imports more expensive was a function, above all, of falling oil prices. The sanctions that helped boost import substitution were imposed by Russia — a supposedly “retaliatory” ban on many western foodstuffs. That ban arguably hit Russian consumers harder, by depriving them of favourite imported foods such as French cheese and fuelling inflation, than it did many of the exporting countries.

    Some analysts suggested president Vladimir Putin was using the sanctions as cover to advance a strategic objective he had already set: making Russia increasingly self-sufficient in food.

    The Russian government also increased subsidies to farmers. The sector has benefited, too, from a move in the past decade to allow private land sales — although land prices, by world standards, remain low. All these developments are at last helping Russia take advantage of some natural attributes. The highly fertile “black earth” region in central and southern Russia is close to Black Sea export terminals well placed to supply big north African and Middle Eastern wheat importers such as Turkey and Egypt.

    Andrey Guriev, chief executive of PhosAgro, the London-listed phosphate fertiliser producer, says the rouble devaluation created a “fantastic pricing environment for anything agriculture can produce”. Add in falling fertiliser and fuel prices, and “in one day, the Russian agricultural sector became as profitable as hell”.

    Globally, a weak agricultural commodities market has hit demand and prices for fertilisers at the same time as new capacity is coming online. But PhosAgro and other Russian fertiliser companies are benefiting from the domestic agriculture boom, with Russian consumption of crop chemicals up 16 per cent last year, against global growth of 2.2 per cent, according to preliminary data from the International Fertilizer Association.

    There are relatively few large quoted Russian agriculture companies. But since March 2014, when sanctions were imposed, shares in Cherkizovo, the meat processor, have jumped 63 per cent, well above the 45 per cent increase in the rouble-denominated Micex index. PhosAgro’s shares have risen 85 per cent in rouble terms in that period, and shares of Acron, another mineral fertiliser producer, have tripled. Growth in Russian agriculture and linked sectors could potentially continue to be strong as rising profits allow farm groups to invest in technology and more fertilisers to improve sub-par productivity.

    The most exciting opportunity lies in Asia, where Russia has a band of fertile land along its border with China. There, the soil and climate — on a similar latitude to the big grain-growing areas of the US — is good for soyabean cultivation. With food exports to China still in their infancy, developing that sector could take years, or even decades. Even without it, however, Russia’s agriculture boom shows that, despite sanctions and the poor state of east-west relations, there are pockets of value and opportunity to be found in the Russian market.
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    Post  Firebird on Thu Apr 27, 2017 2:20 pm

    http://www.newsweek.com/us-russia-nuclear-arms-race-over-and-russia-has-won-581704

    This is quite funny.
    Most of the time News(or should I say NeoCon Propaganda) Week has been claiming Russia is a load of rubbish - "doesn't make anything"/"tiny gdp"/"dying" etc etc

    I suppose Newsweek now thinks Russia is the sole superpower. Does that mean their journalists will be going to Moscow and asking for jobs? HAHA
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    Post  kvs on Thu Apr 27, 2017 3:37 pm

    Firebird wrote:http://www.newsweek.com/us-russia-nuclear-arms-race-over-and-russia-has-won-581704

    This is quite funny.
    Most of the time News(or should I say NeoCon Propaganda) Week has been claiming Russia is a load of rubbish - "doesn't make anything"/"tiny gdp"/"dying" etc etc

    I suppose Newsweek now thinks Russia is the sole superpower. Does that mean their journalists will be going to Moscow and asking for jobs? HAHA

    Such stories about the Russian "threat" are the bread and butter of the US and by extension the NATO mass media.
    When they cover civilian life they universally paint Russia as a failure. "Upper Volta with nukes" as Thatcher put
    it. Same shit propaganda day in and day out.

    But NATO is nothing more than a dog barking at the caravan when it comes to Russia.
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    Austin

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    Post  Austin on Fri Apr 28, 2017 7:13 am

    Russian Direct Investment Fund to Announce Major Deals at China's Silk Forum

    https://sputniknews.com/business/201704281053090946-russian-direct-investment-fund-silk-forum/

    MOSCOW (Sputnik) — On May 14-15, Beijing will host One Belt, One Road summit, gathering leaders of 28 countries, including Russian President Vladimir Putin.

    "We will have a number of major deals at the One Belt, One Road forum, we will have a number of big projects with China, including with the Rostec corporation in Russia, and during this summit we will be able to announce a number of important deals. We cooperate not only with the Chinese Investment Corporation… but also with other major Chinese funds," Dmitriev told reporters.
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    Post  Vann7 on Fri Apr 28, 2017 10:13 am

    Austin wrote:


    Can some one explain how does Floating Rouble and Capital Account Convertibility helps ?  

    Not an economist ,but as far i know , Russia can benefit from a floating Ruble ,because
    it inspire confidence on the currency ,that its value is not being manipulated. Aside that
    a undervalue ruble will promote Russians to buy local products made in Russia ones ,
    instead of western ones. So they can benefit from it. it also promotes investments
    in manufacturing in Russia ,because foreign countries can get more from their money.

    So a strong Ruble is not what Russia need. But a weak one instead ,to attract companies
    to build manufacturing plants in Russia. If the ruble becomes too strong ,lets say 50 vs 1 dollar ,
    they will likely lower the interest rate again to weaken it. Because a weak ruble helps Russia
    counter the low oil prices. since they are paid in Euros.

    a floating ruble helps in the confidence in investors ,to not be worried about Russia
    manipulating its currency.
    franco
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    Post  franco on Fri Apr 28, 2017 12:14 pm

    The cost of 3 years of Sanctions, Russia loses over $50 bl while the West (Europe) loses over $100 bl.

    https://sputniknews.com/business/201704281053097805-wets-russia-sanctions-losses/


    Suspect the only one not to lose was the good old US of A.
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    Post  PapaDragon on Fri Apr 28, 2017 3:40 pm


    Russian foreign reserves reach highest level in 28 months

    https://www.rt.com/business/386436-foreign-reserves-russia-bank/


    Bank of Russia Answers Putin's Call With Frontloaded Easing

    https://www.bloomberg.com/news/articles/2017-04-28/bank-of-russia-answers-putin-s-call-by-revving-up-pace-of-easing
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    Post  miketheterrible on Fri Apr 28, 2017 6:53 pm

    http://tass.com/economy/943888

    Push for free trade between Iran and EEU. Getting closer and closer to a free trade agreement. Both sides want it.
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    Post  PapaDragon on Fri Apr 28, 2017 8:48 pm

    franco wrote:The cost of 3 years of Sanctions, Russia loses over $50 bl while the West (Europe) loses over $100 bl.

    https://sputniknews.com/business/201704281053097805-wets-russia-sanctions-losses/


    Suspect the only one not to lose was the good old US of A.


    They did not become this big by being flat out stupid
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    Post  kvs on Fri Apr 28, 2017 11:25 pm

    PapaDragon wrote:
    Russian foreign reserves reach highest level in 28 months

    https://www.rt.com/business/386436-foreign-reserves-russia-bank/


    Bank of Russia Answers Putin's Call With Frontloaded Easing

    https://www.bloomberg.com/news/articles/2017-04-28/bank-of-russia-answers-putin-s-call-by-revving-up-pace-of-easing

    But we had hysterical news pieces and posts here not too long ago that Russia was going to deplete its reserves.

    Nabiullina better hurry up with the rate cuts. The ridiculously high rates are putting pressure on the ruble exchange
    leading to a rate to the dollar decline which is bad for Russian exports and undermines the offsetting effect on the
    low oil price.

    kvs
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    Post  kvs on Fri Apr 28, 2017 11:28 pm

    PapaDragon wrote:
    franco wrote:The cost of 3 years of Sanctions, Russia loses over $50 bl while the West (Europe) loses over $100 bl.

    https://sputniknews.com/business/201704281053097805-wets-russia-sanctions-losses/


    Suspect the only one not to lose was the good old US of A.


    They did not become this big by being flat out stupid

    The problem is that Europe went into the retard mode around WWI and never left it. Uncle Scumbag transferred
    the riches to its banks from Europe during WWI and set itself on the road to being a superpower. Euro-peons
    act like loyal poodles to keep Uncle Scumbag rich and in charge.
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    Post  Austin on Sun Apr 30, 2017 6:32 am

    Gazprom Reports $17.5 Billion of Profit in 2016 Despite Weaker Pricing

    https://www.oilandgas360.com/gazprom-reports-17-5-billion-profit-2016-despite-weaker-pricing/
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    Post  Austin on Tue May 02, 2017 2:41 pm

    Interview with Alekseya Kudrina , He has completed work for for the country's development strategy for the next six years, after the presidential elections in 2018

    Подробнее на ТАСС:
    http://tass.ru/opinions/interviews/4225506



    Alexei Kudrin, if not rebuilt in six years - will remain with nothing


    Подробнее на ТАСС:
    http://tass.ru/ekonomika



    - You, together with experts working on proposals for the development strategy for the next political cycle. Are these proposals?


    - Expert's Suggestions are ready in full. We offer draft Strategy of modernization of public institutions and the economy. In agreement with the administration, we will present it to the President personally, this should happen in May.

    - This will happen at the meeting of the Expert Group or in any other format?


    - It will be a meeting of the president, whom he had to invite him, I find it hard to say, but at this meeting he will personally get acquainted with our offer.

    - Publish your proposals you are not planning Prior to this meeting?


    - Moreover, we have it all will not submit to the general public, because we are talking about the president's strategy, and the president will hold a great job with his staff to determine what experts offer he shares what proposals he would be able to agree with major groups in society. The strategy should be a document that brings together the different layers of the population. It must be demanded by the country, so I think that the presidential administration, a lot of work to create a real strategy based on the suggestions of experts. Strategy - a policy document, the president should it completely separate, so it may be something to add or exclude something.


    Investment in human capital



    - What could be the rallying point for different social groups?

    - The strategy consists of three main priorities and multiple projects. The main priorities - people, technology, and public administration. A task that has been set by the President, - to achieve growth rates above the global average, that is 3.5% or higher. We analyzed all the possibilities of Russia on capacity growth in the current conditions in the next six years. This is a very difficult task, but it is solvable. It can be solved, if we draw a number of structural reforms. All of these reforms, we have registered. We consider them verified, realistic, not painful in general, but it requires certain changes and drastic measures. Maybe it will be necessary from something familiar and refuse to do something new. In this regard, we have been able, in my opinion, to create a system of measures, which will make it. The main challenge that faces the country - it is productivity growth based on new technologies. For six years, all the changes that will occur in the world in industries, occupations, yet will not seem so grand. But after six years, we will see significant changes in production methods, in technology, in the professions, in the requirements for people skills. And if we have these six years will not qualify, we will not restructure themselves, that then we will be left with nothing, we do not have time for those trends that are developing in the world. We are not saved as a technological power. On the other hand, it will also be a period of investment in human. It's really different, more attentive to the person, since his birth, school, preschool, in terms of its ability, in terms of learning new skills in a changing world. This has not happened in Russian history. It will be necessary not only to imbue people with the knowledge and provide them with the skills that they whole life will be more successful, effective and efficient. The discovery of talents or abilities - the major problem, but it will need to spend a lot more money. In this regard, we believe that it is necessary to 0.8% of GDP spending on education. This should be done gradually, not in the first year, but to raise the cost of this new level in six years.


    - At that these funds should be spent?

    - Our universities must be equipped with the most advanced technical means. Recent advances in robotics, biotechnology, genetics, have become a common practice for students and teachers. One hundred and fifty universities in the country should have all the core competencies in the most modern industries. Another part of our educational program is associated with a significant improvement in secondary special education, colleges need to make high-tech, multi-functional and multi-disciplinary. We have thought, as the people who will not study in the best universities, will also receive the latest skills. These universities have become centers of production, promotion and dissemination of new technologies in their regions. All this chain we seriously have registered in our proposals, that another life of our science and education.

    - You are here do not see the risk of a deep social division between those who will study at the elite universities and versatile college?


    - Firstly, we do not limit ourselves to supporting 150 universities. These 150 - this is the most advanced. Will universities that perform different tasks - is, for example, the training of engineers for housing and communal services, which will also be a lot of new technologies. But the question of educational inequality is solved by other methods. We believe that regardless of the fact that you graduated from the elite university or college, you will be able to continue to learn in the other, including in the elite universities. This is an ongoing process of selection. An area where you can get the latest knowledge will expand significantly. Today there are advanced colleges by large companies, where people learn the most modern professions. This experience we offer to develop. As part of secondary vocational education, we have significantly expanded the business involved in the financing and support of the college. We want to join the state's involvement and support for companies where necessary to prepare specific expertise to the specific needs of industries and regions. In the Northern (Arctic) Federal University in Arkhangelsk, where I am the chairman of the Board of Trustees, we work with such companies already spend. For university tasks we are working with the company to create a series of laboratories for research in petroleum, pulp and paper, forest industry, we try to make students came to the latest technologies. The company help us to finance this.

    - What are the structural reforms you have to offer in education? Remain whether the existing institutions - ministries, research institutions, the Academy of Sciences?


    - Of course, we have analyzed the quality of these institutions, schools, universities and their ability to maintain the level of education. Here is an important example that we analyzed: currently 25% of our graduates can not pass the international test on functional literacy. It turns out that fighting for a great number of people at the same time we have a very low educational potential. A quarter of students can not complete the task within the framework of basic skills, which gives the school. This problem exists in all countries, but in developed countries is between 5% and 8%, and we have - 25%. That is, we lose their potential in education.

    - Why is this happening? Maybe they have the job easier?


    - Tasks have become more complex, but there are a few others learn, there are other methods of education. Other countries are trying to develop critical thinking, social practices, and project-based approach. The student or the student himself must make a few projects on their own to come up with each project and provide all the necessary components. It should become fully independent in their project work. the world is now in demand by those who prepare their own solve the problem. It changes the mentality of citizens, developing the ability to become more independent, creative. Most of the leading universities in the world have strict requirements for the development of critical thinking. It is very developed in the debates in schools and universities, there are bound to argue with the teachers. My faculty of St. Petersburg University just has these methods in Russia. I would like to tell about another program - a fundamental change in the training and retraining of adults. Now one in five adults learn, and we need to studied every second. We also need to increase the supply of such training on the market. Training after university should be continuous. A person should be retrained on average every three years. It must be a constant practice, when you take courses every year for two or three weeks, with the help of the enterprise or for their money, and in his spare time, and acquire new, more modern competence in computer science, management and negotiations.

    - What profession for six years could disappear? For example, many say that will soon disappear accountancy profession.

    - it does not disappear after six years, but many calculations will become more and more automated. Someday, no longer have to manually count the balance of enterprises. Even taxes are considered robots, and we remove the entire scope of problems in the area of ​​tax calculation and collection of fines.

    - What kind of profession, on the contrary, will be in demand?


    - In the next six years we will need several times more programmers to the processes of digitalization of all sectors. Russia is still not ready for it at all. That is, even if we ever wake up and realize the digitalization of the scale, such a large number of programmers, which is necessary for such a scale we have not. Therefore, we need to increase the training of programmers in the coming years to achieve these objectives. And if I said that in 2024 to be completed in the main digitization of the leading sectors, it means that it is necessary to directly today to start to solve the problem in the universities. But universities have not yet felt that demand, and the company did not understand in what world they have already passed, that after three or four years, they will be nothing to catch. Many other countries have already realized this and key performance indicators in the training program for professionals in all industries have set ourselves.


    Increase life expectancy




    - In addition to education, what other investments in human assume your suggestions?


    - An important part of our proposals with regard to health. Without improving the health and active longevity we will not have high productivity in the country. A person who will live in the future will have more opportunities through new technologies, medicine, surveillance and different procedures to be more healthy. Our country is badly needed, because we, unfortunately, have the highest number of deaths among men of working age. Infant mortality have three times higher than in neighboring Finland.

    - You mentioned the increase in life expectancy. In this context, how should increase the average age of the Russians?


    - The average age of the total increase to 76 years, and now we have 71.4.

    - You said that your proposal is to increase funding for education to 0.8% of GDP. As far as health care costs will be increased? What other areas do you propose to increase funding?


    - At 0.7% of GDP, too, for six years. Road construction and agriculture, the creation of new highways, the introduction of modern technologies in the transport, we also propose to increase funding to 0.8% of GDP.

    - And due to what you propose to increase spending?


    - Some of these measures have already been budgeted for, such as a reduction in defense spending. We do not argue with that. We offer this level of security in the future. We also offer a reduction in total public spending.


    MITIGATION budget rules



    - What other measures do you propose to ensure that the increase in health and education spending?


    - We propose to mitigate the fiscal rule, increasing inherent in it the price of oil from $ 40 to $ 45, it should give about 0.5% of GDP and about half a percent of GDP deficit target increase. That is not to reduce it to 1% of GDP, as envisaged now and save at the level of 1.5% of GDP.

    - Do you offer the Ministry of Finance to give up the goal of the federal budget deficit at 1% of GDP over three years?


    - The price of balancing the budget has always been above $ 80 per barrel and reached $ 110. When we were at the peak of oil prices, I said that to have a deficit of above 1% of GDP is dangerous, because if the oil price drops sharply, the deficit immediately could reach 5%, as it was in 2009. But if we assume oil prices of $ 45 per barrel, the decline may not be large. So on prices, which are now developed, it can be softer to do in relation to deficit. The previous peak we lived on huge risks - have yet the budget deficit was just wrong at high prices such. And now reasonable.

    - You have always been a supporter of hard and fast rules in the expenditure budget. You change this position?


    - If today we do not want to raise the business tax for a period of regrowth, I think that these steps are compromises and quite reasonable. In some lose, something to win. But most wins. Secondly, if we do not invest in infrastructure, education, health care, then we can not go to the current economic model. If we lose these six years, we are likely to be difficult to catch up. Oddly enough, we now come to the point where the next six years are the most important, decisive in the industrial revolution. It started. If we have tighten their participation in it, Russia risks losing the role of technological power.

    - What do provide your suggestions to the Russian industry was the participant chains of new technologies?


    - A fair question. Firstly, we need to learn to use technology created by others, to create conditions for the exchange of technology and investment in already existing technologies that raise productivity significantly. Second, to create conditions to ensure that we ourselves have created technology such that each enterprise itself to seek new opportunities to use both attracted and new technologies. But innovation - it's not just technology. Innovation - is also new solutions in the management and organization of labor. Roughly speaking, the same 3D-printer is changing the structure of the plant and the entire control system. Modern Internet technologies are changing entire industries control system. As a result, you need fewer people, and decisions are made based on the study of large databases. When I speak about innovation and technology, I also have in mind the new control technology, and here Russia has a very good potential. For example, there is a Russian company that has created a completely new innovative model of management of production of the new Airbus model in Europe. Such control technologies not found anywhere else in the world.

    - What part of your proposals dedicated to the digital economy?


    - We believe that all of the critical infrastructure in the country - in transport, construction, health, education, public administration - have to go through the full digitalization by 2024.


    HOW TO KEEP SAVING



    - You are talking about the budget rule in the oil price of $ 45 per barrel of oil. You have become more optimistic about the price of oil?


    - No, my prediction is preserved: the oil price will move in the range of $ 40-60 per barrel in the next four to five years. It will be during the establishment of a new equilibrium. Even if the price goes below $ 40, then we will be able to safely carry out the level of expenditure, which is calculated at $ 45. We have reserves and sovereign wealth funds. In the end, you can borrow in the market at reasonable levels. But I think that the oil price will be $ 45 and above, taking into account all the risks a reasonable compromise on the budget. One of the questions is not only the budget, but the fact that we give the market more currency, which means that the market will be 0.5% of GDP higher currency. But the impact of such currency at the exchange rate is not as great. The problem is not that the ruble pereukreplen. The main thing that was not great volatility in oil prices and the ruble. The main problem - is the volatility, of course, not the level.

    - So you do not agree with the fact that the end of the year, the ruble will weaken to 68 rubles per dollar, as the Ministry of Economic Development says? What is your forecast?


    - With the current oil price of the ruble will weaken a bit, maybe a little more than 60 rubles per dollar. I think that with the current price of around $ 56 per barrel, the ruble could be a little weaker. If the level of oil prices continues, the exchange rate will weaken slightly.

    - Now everything is actively discussing a new instrument - federal loan bonds to the public. For example, German Gref has already bought the bonds. And you?


    - I'm not supposed to participate in this arrangement. But I believe that it is a normal tool for those who can invest more than three years. Rate is higher than on bank deposits. When the maximum occupancy for three years a major positive effect comes closer to the end of the third year, as the coupon rate increases. The whole effect can be obtained if you have reached the end. OFZ for the population - this is not the Extremely urgent amounts for repayment of the budget deficit, but this element of the policy of development of a new market, and from this point of view, this is correct. It is also increasing the financial literacy of the population, which will further stimulate activity of the population present on the investment market.

    - What's to keep their savings are now taking into account the ruble and oil prices?


    - I have always talked about a simple model - in dollars, euros and rubles to the same extent. Although today I would add - and in government bonds.



    Reform of the courts, and public administration




    - What reforms are assumed to be in the public administration?


    - I have already said about technology, about the man, his opportunities and models of education, but another important area - it is governance. Without government restructuring, technology changes in the government, changing the order of the set does not work professionals.

    - whether the reduction of the state apparatus is assumed in your proposals?


    - We are now with RANHiGS rebuilding civil servants training system for new tasks, this process has already begun. In addition, the need to change the requirements for recruitment. Now this is a random, chaotic process. We must have a more slender, a strict system of selection and training, as well as a system of key performance indicators. That is, we build the whole network moves in relation to public administration. As a result, the State Administration of population decline and increase in efficiency at times.

    - What are the reform of power structures do you offer?


    - In the field of criminal law need some decriminalization because of petty crimes do not need people to sit for so long that they were arrested and kept in jail for a long time before the investigation. We believe that it is possible to decriminalize a number of crimes, increasing administrative fines. In the law enforcement part of it is more about accountability of law enforcement agencies, which should better reflect the results that they can not be distorted. Much work is carried out on the crime statistics, has reported to the president. We also participated in the examination and work in this direction. Now we are going to see more objectively the work of law enforcement agencies, which will allow us to more effectively respond to the situation in the criminal world, and understand the crime situation. For example, according to a survey we conducted, half of the citizens does not go to the police about the crimes that are committed against them. Of course, this is not the most serious crimes, but half of the citizens is not just about addressing. Of those who apply, and it's about 7 million people, only 2 million cases of criminal proceedings. I think that in the case if they agree with our findings, we have a list of measures that need to be taken to rectify the situation.

    - Will your suggestions separate political unit?

    - The implementation of all these measures, there is a question of trust. In our view, the implementation of these proposals significantly raise confidence in the authorities and policies. If the strategy meets with distrust, many of its proposals are not perceived or will be met with incomprehension. If the strategy will be presented as an interconnected system of measures, which from the outset will be strictly enforced, then the confidence will grow literally by month. But this is not a special power, a necessary condition for the execution of the overall strategy.

    - How do you see the main result of the implementation of your proposals?


    - We go to the 3-3.5% growth in the average and slightly above for all years from 2018 till 2024-th. Growth will accumulate in 2018. The following year, growth will be, according to our estimates, about 2.7%. With this growth of GDP by 2024 will grow by 29%, while real disposable incomes of the population - 25%. Labor productivity will grow by 30%, while non-oil exports - almost twice. This is an ambitious task.

    Подробнее на ТАСС:
    http://tass.ru/opinions/interviews/4225506


    Last edited by Austin on Tue May 02, 2017 2:50 pm; edited 1 time in total
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    Russian Economy General News: #7 - Page 24 Empty Re: Russian Economy General News: #7

    Post  Austin on Tue May 02, 2017 2:49 pm

    kvs and others can you comment on Kudrin proposal over Stolypin .....

    I think Putin will accept most of Kudrin group proposal and few of Stolypin
    miketheterrible
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    Post  miketheterrible on Tue May 02, 2017 3:21 pm

    There isn't anything new than what is already being done, in what he is saying. Only thing that is dangerous is his comment about the criminal system, were de-criminalizing certain things. Usually that leads to a slippery slope.
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    Post  Austin on Wed May 03, 2017 12:35 pm

    miketheterrible wrote:There isn't anything new than what is already being done, in what he is saying. Only thing that is dangerous is his comment about the criminal system, were de-criminalizing certain things. Usually that leads to a slippery slope.

    Can you compare Stolypin Economic Model to that of Kudrin proposal ?

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    Russian Economy General News: #7 - Page 24 Empty Re: Russian Economy General News: #7

    Post  Austin on Wed May 03, 2017 12:35 pm

    Russia’s Reserve Fund up 2% in April

    Business & Economy
    May 02, 20:20 UTC+3

    MOSCOW, May 2. /TASS/. The Reserve Fund rose 2% to 931.3 bln rubles ($16.3 bln) and the National Wealth Fund (NWF) added 1.4% and grew to 4.2 trillion rubles ($73.7 bln) in April 2017, the Russian Finance Ministry said on Tuesday.

    The Reserve Fund declined in March 2017 by 2% to 913 bln rubles ($16 bln) and the NWF dropped 1.7% to 4.1 trillion rubles ($71.9 bln).

    More:
    http://tass.com/economy/944266
    miketheterrible
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    Post  miketheterrible on Wed May 03, 2017 6:34 pm

    Austin wrote:
    miketheterrible wrote:There isn't anything new than what is already being done, in what he is saying. Only thing that is dangerous is his comment about the criminal system, were de-criminalizing certain things. Usually that leads to a slippery slope.

    Can you compare Stolypin Economic Model to that of Kudrin proposal ?


    well, Kudrin's plan seems to be more about advancing the market through the universities by advancing them, they can be centerfold of new tech development. Which is already the case (example: KnAAPO hiring a university to do its PAK FA avionics). I don't know how this will translate to growth though. Seems to be an idea of cause = effect but unless there is a medium that can connect communication between industries and universities, it just seems like a waste of money. He also says for increase in social obligations. Once again, that ends up creating a nanny state and the most effective manner of increasing wealth should be through wages from industries, not hand outs.

    Stolypin club initial idea is great - all about business and getting industries to increase output as well as expansion of production either through new industries or new production lines. Their method of obtaining money is semi agreeable in the sense that cheap credit should be applied. But making cheap credit available at all times creates the issue of surviving off of credit is a bad thing, something that lead to major issues in the past.

    The method now, makes a bit more sense. Although, there is some room for improvement. For instance, most venture funds owned by government are gone now. Only Skolkovo is available. There needs to be more government guarantees through some form of funds available for small time development, so long as it will have a return. Best option if lack of money for it, is subsidies. Which seems to be something that is happening. There is also an increase in private venture funds in the Russian market. So there is that.

    I think, personally, Russia's best option is either: 1) keep with current method of development with possible fixes along the way from bad investments or things taking too long to implement or (2) take a bit from both groups to create a third option.
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    Post  kvs on Thu May 04, 2017 4:43 am

    I am against laissez-faire but at this moment Russia does not need economic engineering of any flavour. It
    needs the CBR parasite off its back. People pimping some program to "save" or "advance" the country are offering
    nothing new and the fact is that the economy is too complex for any plan.

    Russia has managed to reach a reasonable economic state, thanks in part to various exogenous shocks that disrupted
    the Yeltsin era distortions (e.g. over-dependence in imports of food). For example, the 2014 sanctions and engineered
    oil price crash that brought down the ruble forex rate. None of the planner wannabes have outlined distortions in
    Russia's economy that should be cleared. This is not sexy enough for political gain, which is what Kudrin and the Stolypin
    club are after.

    The best thing for Russia's economy is to

    1) Take control of the CBR and set the prime rate to 3-4%. Inflation is total non-issue. Stop other
    CBR shenanigans that distort Russia's financial markets.

    2) Improve regulatory laws so that bureaucrat parasites do not harass small business owners.

    3) Enforce the law and clamp down on corruption. Pass laws to outlaw all sorts of lobbying of the
    Duma.

    4) Enforce the law and clamp down on 5th column seditionists paid by NATO. Their task is to
    sabotage Russia.
    miketheterrible
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    Post  miketheterrible on Thu May 04, 2017 6:30 am

    kvs wrote:I am against laissez-faire but at this moment Russia does not need economic engineering of any flavour.   It
    needs the CBR parasite off its back.   People pimping some program to "save" or "advance" the country are offering
    nothing new and the fact is that the economy is too complex for any plan.  

    Russia has managed to reach a reasonable economic state, thanks in part to various exogenous shocks that disrupted
    the Yeltsin era distortions (e.g. over-dependence in imports of food).  For example, the 2014 sanctions and engineered
    oil price crash that brought down the ruble forex rate.    None of the planner wannabes have outlined distortions in
    Russia's economy that should be cleared.   This is not sexy enough for political gain, which is what Kudrin and the Stolypin
    club are after.

    The best thing for Russia's economy is to

    1) Take control of the CBR and set the prime rate to 3-4%.   Inflation is total non-issue.   Stop other
    CBR shenanigans that distort Russia's financial markets.

    2) Improve regulatory laws so that bureaucrat parasites do not harass small business owners.

    3) Enforce the law and clamp down on corruption.   Pass laws to outlaw all sorts of lobbying of the
    Duma.  

    4) Enforce the law and clamp down on 5th column seditionists paid by NATO.   Their task is to
    sabotage Russia.      

    I think a secondary organization, Not for profit NGO should be set up, maybe by known groups like ONG (or whatever they are called) to do third party audits of government activity in the nation, and making sure laws are being enforced (using media to their advantage) and to audit banking system.

    CBR is a reflection of the nation from the 90's.  It does need to change.  You are right in that all the development and prospects of Russia isn't thanks to economists in the nation, especially Kudrin.  It is entirely due to cause=effect from sanctions/counter sanctions.  It was pretty sad that Russia imported food that it was capable of producing for decades before hand.  That shouldn't have been happening. Funny part was that all was set up under Kudrin era. Cheap this and cheap that for domestic consumption. Following the US/UK/Canada business model.

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