Actuality October, 30, 2007

Only interests on credits, which Russian banks and companies have taken in the West, already made $40-45 billions.

This figure was made public by the first vice chairman of Bank of Russia Aleksej Ulyukaev at the meeting of commercial banks’ representatives with guidance of CB (Central Bank of Russia). He reported also, that according to the last data the general volume of external borrowings for 9 months of 2007 exceeded $300 billions and servicing of these credits leads to long-term reduction in liquidity.

The only thing that can alleviate a situation in this aspect is inflation risks, connected with dollar. Meanwhile, weak dollar is favorable for the USA, which diminishes deficit of trade balance, and that is why in the near future, as analysts forecast, euro will grow minimum to the end of 2007. In prospect to the end of current year the cost of unit of European currency can rise to the level in $1,45. This can fully promote lowering of GDP growth rates of the USA, which was forecasted by IMF at level in 1,9% instead of earlier said figure in 2,8%.

As a result, specific share of Russian debt to the West is reducing. One should take into consideration that external debt of Russia – %384,8 billions – approached today the volume of gold and foreign currency reserves of the country – $424 billions. And it didn’t simply approach, but continues to grow. Besides, the sector of borrowings of non-state business is $220,4 billions. The growth rates are very high – if in distant 2000 non-state companies were in debt to western creditors of around $570 millions, for example, in 2005 it was already $20 billions.

Low inflation of Eurozone countries and overseas economy has allowed to take foreign currency credits at low interests. Frequently, a lending rate did not exceed the level of 5%, and at the same time most of these credits are long-term, i.e. with payment periods minimum under three years. In Russian terms of  quite high inflationary load on the economy it is practically unreal to borrow money less than under 12-14% annual interests without a serious maintenance. Therefore, while such gap in consumer price index will be saved, volumes of credits, taken abroad, will grow only. At least, as soon as the crisis of liquidity ends.

As a result from all package of measures, called to fight with increase of borrowings abroad, preparation to monitoring of situation is chosen at the moment. The deputy minister of finance, Sergey Storchak, underlined that “we already prepare an administrative base for monitoring”. Generally speaking, there shouldn’t be any problems with application of such monitoring, because information about such operations of domestic banks and companies is in CB of Russian Federation.

Logically, after monitoring of situation in this sphere a number of mechanisms can be applied, that can limit this process. In particular, by this way can act a legislative ban on such borrowings, but as quite unpopular and undemocratic measure.

Except this application of credit subsidization is possible, however today is unclear a term, for which such subsidization can be introduced. And there is no situation assessment yet – from where and in what amount to provide financial resources for this purpose.

On the other hand, the necessity or, rather, aspiration to make loans abroad is one of the characteristics of the modern world and dynamically developing states in this world. And in this case Russia has where to grow, because according to one assessment index – correlation of external debt volume to GDP of the country – Russia yet tails along the developed countries of Europe. In Russia the external debt is 10% from gross domestic product, while, for example, in Italy it approaches 70%.

Although, certainly, at uncontrolled growth of external borrowings there is a hazard for Russia at which business would be short of means for debt service in near future. And if for private business problems with the repay can turn into the so-called personal bankruptcy, in case of problems with a state corporation or state bank, the state should undertake its obligations. And would be the budget able to manage such obligations in case of oil prices’ reduction? That’s what disturbs politicians and economists of Russia.