Transcript
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PLEKHANOV RUSSIAN UNIVERSITY OF
ECONOMICS
INTERNATIONAL BUSINESS SCHOOL
COURSEWORK IN ECONOMICS
PUBLIC DEBT IN RUSSIA
Student: Alexandra Gerasimova
Group: 5203
Supervisor: Tsilikova M.S.
Moscow
2011
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Table of Contents
Introduction ......................................................................................................................... 2
1. Definition of public debt and its structure ........................................................... 3
2. A public debt of the Russian Federation and its structure. ............................ 52.2. Analysis of public debt of the Russian Federation and the main
problems in its management and servicing. ............................................................ 9
3. The main directions for improvement of debt policy in Russia ................ 16
Conclusion ......................................................................................................................... 19
References: ........................................................................................................................ 21
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IntroductionPublic debt is one of the most important indicators of macroeconomic indicators
for every country because economic security of the country, stability of social and
economic situation and rates of economic growth and inflation mainly depend on
amount of the public debt . Last years the problem of increase of public debt both in
developed and developing countries becomes more and more serious, because it leads
to social-economic crisis in countries allowing excessive growth of public debt and
decrease in their credit ratings. This, in its turn, decreases degree of confidence from
the point of investors and is the reason for instable situation on stock markets.
The examples of it are a number of countries in the European Union, like Greece,
Spain, Italy and Portugal, which had to cut government spending sharply and toresort to the help of the European Union and the USA, which have recently been on
the verge of so-called technical default.
Moreover, very fast growth of public debt increases cost of borrowing on
external markets and cost of servicing public debt and this also negatively influences
on macroeconomic indicators of the government.
For the Russian federation the problem of public debt and its increasing rate is
less serious than for the EU-countries because of macroeconomic situation andfavorable economic conjuncture connected with prices for oil. However, the problem
of effective management of public debt faces for the Russian Federation as well,
because rate of public debt growth in the Russian Federation has recently gone much
faster. According to the data of Ministry of Finance, public debt will increase by 2
trillion rubles per year and at the end of 2014 will reach 12 trillion rubles. This means
that only during 3 years the volume of government borrowings can become 3 times
more and reach 17% of GDP. Thereby studying of problems, connected with
effective public debt management is definitely very urgent for Russian Federation.
This coursework provides information, analysis and possible resolutions of
understandings of public debt , its structure, features of formation of public debt in
Russia and some directions on improvement of public debt management in the
Russian Federation.
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1. Definition of public debt and its
structureAccording to the economic theory public debt is the sum of the loans issued and
not settled by the state with not paid interest on them. So-called national debt shows
more completely the of public debt including indebtedness of the central government,
debts of the state enterprises and regional authorities.
Depending on sphere of placing of loans the public debt is subdivided on
internal and external. The internal public debt is formed as a result of borrowing
means in the country from the population, enterprises and organizations. As a rule,
internal loans of the state in developed countries are much more than foreign loans.
The external public debt represents the sum of the borrowed funds received from
foreign states, enterprises, organizations and citizens.
Picture 1. Structure of public debt
Public debt can be also differentiated between direct and indirect (hidden) public
debt . The last one is formed at issue by the government of guarantees under credits
to private and state enterprises, regional authorities, and also at the expense of
insurance of credits. It is called indirect or hidden because it is shown only in case of
insolvency of the borrower.
Public debt system allows the state to receive money funds on covering of
budget deficiency. In the European Union countries the rate of budget deficiency
PUBLIC DEBT
Internal Publicdebt
External Publicdebt
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considers is considered as 3 %. However recently central government budget deficit
in a number of the European states considerably have exceeded this amount.
At the same time the public debt carries out a role of the important tool of
macroeconomic adjustment. Managing the indebtedness, the state influences a
condition of credit and monetary sphere, and through it on economy as a whole.
Public debt management means determination of issuing conditions of new loans
(size, terms, rate, interest rates), servicing of before issued loans and their
transformation (conversion and consolidation), repayment of the loans, which terms
have expired. Special divisions of the Ministry of Finance carry out the listed
functions with the assistance of banks.
For the quantitative characteristic of a public debt are used such indicators as
general size of indebtedness, ratio of its various kinds, differences of the received and
given out credits. The difference between the size of a public debt and gross
(national, domestic) product, indebtedness per capita are very important. Here last
years a tendency also abundantly clear: amount of public debt in relation to gross
national product constantly grows, and a number of the countries with the developed
market economy, including in the USA, Italy, Greece, Spain, Portugal and some
others has practically reached a critical point.
At the foreign indebtedness analysis degree of involvements into external debt
(the relation of volume of an external debt to a national produce) is determined, and
also two more indicators characterizing ability to meet payments of the state. The
first of them shows the attitude of size of an external debt to the currency earnings
sum (counting on a year), the secondcorrelates the annual size of payments on a
debt to volume of foreign exchange receipts for a year (critical value of this indicator
is considered to be 25 %).
External debt can appear because of two basic reasons: as a result of direct loan
of means at foreign states, private companies and by sale of government securities
foreign legal and to physical persons, the states. External debt consequences are
heavier for the countries, than internal ones. At external debt the nation is forced to
give to other countries the valuable goods and services to pay interest and to liquidate
a debt that reduces a welfare station of the population. At representation of a loan the
country-creditor can demand accomplishment of some conditions that are
inconvenient for borrowing country. In connection with negative consequences of an
external debt its limit is usual legislatively established.
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Considerable influence of level of a public debt on a situation in national
economies causes necessity of effective control behind a central government debt,
especially from a legislature. In the countries from the developed market supervise
the size of a central government debt, establishing or a limit of its absolute value (the
USA), or a gain limit for a year (Germany, France, Great Britain).
The primary goals of public debt management as a component of financial policy
of the government, include development of general strategy of the state internal and
external loans, their reduction in price, an effective utilization of extra resources,
timely accomplishment of debt obligations. The excessive volume of a public debt
can become a massive problem for national economy.
Thus internal debt growth is especially dangerous to the country with low level
of incomes, and, hence, savings. A negative consequence of growth of a public debt
is the increase in interest payments on it. If economy experiences stagnation or gap in
production, interest payments can become very problematic for the country.
Therefore it is necessary to trace constantly dynamics of a ratio between internal debt
and volume of national production. If the debt grows more slowly, than gross
national product volume it means reduction of its rate in national product. If growth
rates of internal debt overtake growth rate of gross national product the public debt
rate will increase. In order these consequences not to became too problematic for
economy the government should take certain measures on debt management.
2. A public debt of the Russian
Federation and its structure.According to the article 6 of the Budget code of the Russian Federation, state or
municipal loan (borrowing) means the transfer into the ownership of the Russian
Federation, it subject or a municipal entity of monetary funds which the Russian
Federation, a subject of the Russian Federation or a municipal entity undertake to
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repay in the same amount with the payment of interest (charge) on the sum of the
loan;
external debt implies the liabilities arising in foreign currency;
internal debt implies the liabilities arising in the currency of the Russian
Federation.
In the article 98 of Budget Code of the Russian Federation the structure of public
dent of the Russian Federation, its types and terms are provided.
The structure of public debt of the Russian Federation is a group of debt
instruments of the Russian Federation on types of debts provided in this article.
1. The debt liabilities of the Russian Federation may exist in the following forms:
- credit agreements and treaties entered into on behalf of the RussianFederation as a borrower with credit organizations, foreign states and
international financial organizations;
- state loans implemented by means of issuing securities on behalf ofthe Russian Federation;
- agreements and deals on the receipt of budget loans and budget creditsby the Russian Federation from the budgets of other level of the budget
system of the Russian Federation;
- agreements for the provision of state guarantees by the RussianFederation;
- agreements and treaties, for instance international ones, on debtprolongation and restructuring entered into on behalf of the Russian
Federation in the past years.
2. The debt liabilities of the Russian Federation can be short-term (up to one
year), medium-term (over one year to five years) and longterm (over five years to 30
years).
The debt liabilities of the Russian Federation shall be repaid within a term set by
specific loan terms and conditions, the term not exceeding 30 years.
It is prohibited to modify of the terms and conditions of an issued state loan, for
instance, interest disbursement and rate, maturity date.
3. The following shall be included in the amount of state domestic debt of the
Russian Federation:
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- the principal face value of the debt owing under state securities of theRussian Federation;
- the amount of principal debt on credits received by the RussianFederation;
- the amount of principal debt on budget loans and budget creditsreceived by the Russian Federation from the budgets of other level.
- the amount of liabilities under state guarantees extended by theRussian Federation.
4. The following shall include the amount of state foreign debt of the Russian
Federation:
the amount of liabilities under state guarantees extended by the Russian
Federation;
the amount of principal debt on the credits of governments of foreign states,
credit organizations, firms and international organizations received by the Russian
Federation.
The article 99 of Budget Code of the Russian federation states:
1. The "state debt of the subject of the Russian Federation" is an aggregate of the
debt obligations of the subject of the Russian Federation.
2. The state debt of the subject of the Russian Federation shall be fully and
unconditionally secured with all assets owned by the subject of the Russian
Federation as making up the treasury of the subject of the Russian Federation.
3. The debt liabilities of the subject of the Russian Federation can exist in the
following forms:
- credit agreements and deals;
Public debt
Long-term(more than 5
years)
Mid-term (1-5years)
Short-term(less than a
year)
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- state loans of the subject of the Russian Federationimplemented by means of issuing securities of the subject of the Russian
Federation;
- agreements and deals for receipt of budget loans and budgetcredits from the budgets of other level of the budget system of the Russian
Federation received by the subject of the Russian Federation;
- agreements on the provision of state guarantees by the subjectof the Russian Federation;
- agreements and deals, including international ones, onprolonging and restructuring debt of the subject of the Russian Federation
entered into on behalf of the subject of the Russian Federation in the past
years.
The debt liabilities of the subjects of the Russian Federation shall not exist in
other forms except as the forms provided under the present item.
4. The following shall be included in the amount of state debt of the subjects of
the Russian Federation:
- the amount of principal debt on credits received by the subjectof the Russian Federation;
- the amount of principal debt on budget loans and budgetcredits received by the subject of the Russian Federation from the budgets
of other level;
- the amount of liabilities under state guarantees extended by thesubject of the Russian Federation.
5. The debt liabilities of the subject of the Russian Federation shall be repaid
within terms set by the borrowing terms and conditions, such terms not exceeding 30
years.
6. The forms and kinds of state securities issued on behalf of the subject of the
Russian Federation, the terms and conditions of the issuance and trading thereof shall
be determined by respective bodies of state power of the subjects of the Russian
Federation in keeping with the present Code and the federal law on the peculiarities
of the issuance of and trading in state and municipal securities.
7. The legislative (representative) bodies of subject of the Russian Federation
and the bodies of executive power of subject of the Russian Federation shall exercise
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all the powers of generating revenues of the budget of the subject of the Russian
Federation to repay their debts and provide debt servicing.
2.2. Analysis of public debt of the
Russian Federation and the main
problems in its management and
servicing.Now the Russian Federation in comparison with the majority of other states with
developed market and developing economy has rather low level of central
government debt.
As of July, 1st, 2011 public debt volume of the Russian Federation is 4,6 bln.
rbl., including internal debt3,6 bln. rbl., and external debt
36,8 bln. dollars of the USA (it is equivalent to 1,0 bln. rbl.). As of July, 1st,
2011, aggregate (i.e. state and corporate) an external debt of the country is 532,2 bln.
dollars of the USA or 28 % of gross national product. Thus the foreign exchange of
Russia (524,5 bln. dollars of the USA) on 98 % covered volume of this debt.
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Schedule 1. The international currency holdings of the Russian Federation, in %
to gross national product
At the same time according to the Basic directions of a debt policy of the
Russian Federation for 2012-2014, prepared by the Ministry of Finance of the
Russian Federation, during the forthcoming period the public debt volume will
annually increase and will reach by the end of 2014 of level of 12 bln. rbl. or 17 % of
gross national product. We will pay special attention that thus the volume of external
obligations of the state will grow almost twice and will be about 2,0 bln. rbl., internal
debt will increase by 2,8 times, and will reach almost 10 bln. rbl.
For comparisonafter crisis of 1998 the external debt of Russia was 100,0 %
of gross national product, and at the beginning of 1999 146,4 % of gross nationalproduct. As of January, 1st, 2000, a external debt has reached 158,7 bln. dollars (and
the total external and internal public debt was about 84 % of gross national product).
In 2004-2008 the public debt was promptly reducing. As a result of long negotiations,
by the end of August 2006 Russia has performed preschedule payments 22,5 bln.
dollars under credits of the Parisian club then its public debt has become 53 bln.
dollars (9 % of gross national product).
For comparison, according to IMF in 2009 , the public debt of Great Britain is68,2 % of gross national product, Germany72,5 %, France77,4 %, Canada
Foreign exchange reserves Aggregate external debt
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81,6 %, the USA83,2 %, Italy115,8 %, Japan217,6 %. In 2010 the Russian
Federation, after a twelve-year break, has again returned to loans in a foreign market,
having placed two tranches of Eurobonds on $5,5 billion. Nevertheless, despite rather
low level of a central government debt, the credit ratings, the appropriated Russia
leading international agencies (BBB with positive forecast from Fitch, Baa1 with
stable forecast from Moodys and BBB with stable forecast from Standard & Poors),
are insufficiently high. Thereupon the Ministry of Finance of the Russian Federation
considers that the international rating agencies highly appreciate a positive condition
of the Russian Federation from positions of a situation with a central government
debt. However, from my point of view, such position of rating agencies is very high
because of dependence of a rate of the Russian ruble and macroeconomic situation in
Russia from dynamics of world prices for oil.
The Ministry of Finance of the Russian Federation considers that proceeding
from the parameters pledged in the Forecast of social and economic development of
the Russian Federation in 2012-2014, and taking into account planned volumes of
loans, during the forthcoming period of value of indicators of debt stability of the
Russian Federation will be still out of dangerous zones.
Really indicators of a public debt of the Russian Federation, calculated on this
period, are much lowe, than at the majority of the states of the European Union and
the USA. Nevertheless, according to the Ministry of Finance of the Russian
Federation, on a number of parameters available "safety factor" can't be considered as
unconditional in provision of debt stability of the Russian Federation.
There are number of the factors which prove increase of risks and the existing
problem, connected with servicing of a public debt of the Russian Federation.
First of all, it is necessary to pay attention that growth rates of a public debt and,
accordingly, expenses on its servicing in the Russian Federation are rather high
(Schedule 4).
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Schedule 4. Dynamics of expenses on public debt servicing in the Russian
Federation
So, in comparison with 2008 in 2011 maintenance expenditures of a public debt
of the Russian Federation will grow in absolute expression by 2,3 times or by 1,4
times in percentage terms to expenses of the federal budget. That is it is rather
considerable growth rates which can influence structure of expenses of the
government budget. As a result according to the Core directions of the debt policy of
the Russian Federation for 2012-2014 indicators of debt stability look as follows.
Secondly, as it is known, all macroeconomic indicators of the Russian Federation
essentially depend on the prices for oil, therefore there are risks of deterioration of a
macroeconomic situation, that in appropriate way will affect on indicators of the debt
Stability. Forecasts of level of gross national product and profitable base of the
federal budget of the Russian Federation for 2012-2014 are made by the Ministry of
Finance of the Russian Federation proceeding from the favorable scenario assuming
high level of the prices for oil and their annual growth: 93 US dollars in 2012, 95 US
dollars in 2013 and 97 US dollars in 2014 However, according to many experts, now
the prices for oil actually are at level of the historical maxima and their further
considerable increase is improbable. Therefore it is impossible to exclude also
situation developments when the actual price for oil will fall essentially below the
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level pledged in the Forecast of socially - economic development of the Russian
Federation for the forthcoming period.
Thus possible falling of the price for oil on 10 US dollars will lead to reduce in
incomes of the federal budget in the sum of an order of 0,5 bln. rbl. and, accordingly,
to budgetary deficiency growth on 1 % of gross national product. At such scenario all
indicators of debt stability of the Russian Federation considerably worsen.
Thirdly, the scenario is rather probable, at which in 2012-2014 the Russian
Federation can lose one of the major factors of financial stability so-called safety
pillow on behalf of the Reserve fund which has been created first of all because of
exclusively favorable conjuncture of the prices for power resources. _ the volume
expected by January, 1st, 2013, will constitute 1,6 bln. rbl. provided that the price for
oil in 2012 won't fall below 93 US dollars for barrel, and replenishment will
constitute 164,0 billion rbl. However in case of development of a macroeconomic
situation in 2012 under the worst scenario, not only it will not be possible to reach
planned volumes of the Reserve fund, but also it is necessary to direct on
accomplishment in 2013 of account obligations as net earnings from extra sources,
and considerable means from the Reserve fund up to its complete exhaustion.
According to Igor Nikolaev, the director of strategic department FBK, in
comparison from crisis of 2008, Russia already doesnt have the Reserve fund in that
volume which has allowed to soften consequences of a possible second stage of a
world economic crisis. And absence of safety pillows will essentially raise
vulnerability of the government budget, will lead to growth of cost of loans and,
hence, to increase in maintenance expenditures of a central government debt.
According to the results of the conducted stress-testing of the debt indicators of
Russia in case of an establishment and preserving during the forthcoming period of
the actual prices for oil at levels on 50 US dollars below predicted, already in 2013-
2014 an indicator the public debt to gross national product will exceed 20-21 %. It
much more low, than in 1998-1999 and is essential more low than in a number of the
European Union countries with the developed market economy and at one of our
partners on Customs to the UnionBelarus. But even such size of a debt under the
relation in gross national product, according to the Ministry of Finance of the Russian
Federation, and it are fixed in the Basic directions of a debt policy of the Russian
Federation on 20122014 will actually reject Russia in a situation of 2004 when the
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country yet had no sovereign credit ratings of an investment category from all three
leading international rating agencies.
Fourthly, according to calculations, in case of development of the negative
scenario,
At which the price for oil will fall to 60 US dollars for barrel and remains on
This level within a year, deficit of the federal budget will exceed 5 % of gross
national product. It will demand research of additional sources of its financing.
Such means like national welfare funds, receipts from privatization and increase
of taxes can be considered. However the usage of means national welfare fund,
considers the ministry of finance of the Russian Federation, will deprive of "safety
pillow chronically the deficit ridden budget of the Pension fund of the Russian
Federation, incomes of state property sale have tactical character, and the increase in
tax burden at economy is extremely undesirable in connection with possible negative
social consequences.
In the conditions of realization of the adverse scenario by key source of a
covering of deficit of the federal budget there are state loans. In view of that volumes
of the last are already established on is unprecedented high level, it is a question of
accumulating of the essential budgetary risks connected, at least, with considerable
deterioration for the Russian Federation, as sovereign borrower, financial conditions
of loans in the capital markets and sharp growth of a debt load on the federal budget,
and, at the most negative succession of events, about impossibility of attraction of
extra resources in necessary volumes on acceptable conditions.
Thus, such factor of the state loans as low current level of a public debt demands
constant monitoring and accepting of operative measures of reaction. While he allows
to pursue a policy of escalating of the state loans, without being afraid of cardinal
deterioration of a condition of debt stability of the Russian Federation. At
development of a macroeconomic situation under the scenarios close to the
confirmed forecast of social and economic development of the country, during the
forthcoming period indicators of debt stability of the Russian Federation remain at
rather safe levels. At planned volumes of loans a debt load on the federal
The budget will remain within the parameters allowing properly to perform
servicing of a central government debt, preconditions for maintenance of sovereign
credit ratings on an investment grade will be kept.
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Before crisis 2008, that is in the conditions of steady proficiency of the federal
budget, internal loans constituted rather small size170-250 billion rbl. a year. Bond
issue of federal loans (federal loan bond) was performed, proceeding from the faster
technical (Maintenance of functioning of the market, creation of non-risk yield curve
and so forth), than financial reasons. The situation has essentially changed since 2009
when the domestic market began to be considered in quality of key source of
financing of budgetary deficiency. Over the last 10 years a domestic market of
government securities has shown steady growth, having turned to a key segment of
financial sector of the country: on volume of transferable securities on federal loan
bond market the considerable share37 % of all debt market of Russia today. Thus
only for last 2,5 years the volume of the market of federal loan bond has increased
from 1,1 to 2,5 bln. rbl., that is more than in twice.
One more important factor - the state guarantees of the Russian Federation. The
state guarantees play more and more considerable role a current stage of development
of the Russian economy, representing itself as the important tool of postcrisis
economic policy. Recently many if not the majority of program documents (branch
strategy, federal target programs, "road maps", etc.) references to the state guarantees
of the Russian Federation as contain the main condition of attraction of money
resources for financing of projects in sphere of modernization of economy, an
infrastructure, private and state partnership, support of export of a hi-tech domestic
production.
Accepting of obligations on the state guarantees makes essential impact on key
parameters of the federal budget. The volume of the given guarantees forms
contingent liabilities of the state and joins in total amount of a public debt of the
Russian Federation. Thus, increase in volume of after-sales commitments directly
Influences public debt growth, expenses of the budget and sources of a covering
of its deficit. The period differed 2010-2011 gradual restoration of world economy
after financial and economic crisis. It was observed that gradual growth of trust of
investors to emitters took place. As consequence, the increase in volume of release of
eurobonds both the developed states, and the countries of emergent markets took
place. Thus uncertainty of a situation of European Union and macroeconomic
problems of some developed countries promoted increase of demand for financial
tools of the countries of emergent markets, including Russia. As a result we managed
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to place successfully during the specified period at once three releases of eurobonds
of the Russian Federation:
Two bond issues of external bonded loans with repayment in 2015 and 2020
for a total sum 5,5 bln. dollars of the USA;
For the first time in history the basic and additional release ofeurobonds of the Russian Federation in roubles (accordingly on 40 and 50 billion
rbl.) with term of circulatuion of 7 years with profitableness of 7,85 % annual on
principal issue and 7 % annualon additional. Thus, in March, 2011 on a capital
cross-border market there was a new type of government securities eurobonds in
roubles profitableness on which became on 70 .. Below profitableness of similar
federal loan bonds on term. The given release became the largest (an equivalent
more than 3 bln. dollars of the USA) on volume placing of eurobonds by the
sovereign states from among the countries of the emergent markets nominated in
national (regional) currency.
Placing of sovereign eurobonds in roubles has been directed on the decision of a
strategic task on expansion of a circle of the investors performing investments in
government securities of the Russian Federation, nominated in roubles, to
strengthening of a role of rouble as regional reserve currency. Besides, loans in
foreign markets in native currency, characteristic for developed countries, promoted
average yield decrease under bonds of internal bonded loans of the Russian
Federation, currency risk restriction for the federal budget.
3. The main directions for improvement
of debt policy in RussiaConsidering high dependence of the Russian economy and a condition of the
federal budget on a conjuncture of the world raw markets, maintenance of a moderate
debt load is a strategic task. Its decision will mean preserving of the major
competitive advantage of our country. The reasonable extra policy will create
conditions for growth of possibilities in a private sector, will provide investmentappeal of national economy as a whole. It is necessary for Russian Federation to
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support the presence at the most demanded segments of the external debt markets. At
the same time it is necessary to take the measures directed on destimulation of inflow
to national economy of "hot money in the form of short loans and credits. Thus, in
2012-2014 The state debt policy will be under construction, proceeding from
necessity, on the one hand, maintenance of capability of corporate Russian borrowers
to involve financing in the external and internal markets on maximum favorable
conditions, and with anothereffective monitoring of a debt situation of nonstate
sector.
Realization of a debt policy of the Russian Federation in 2012-2014 should be
performed according to following purposes:
provision of equation of the federal budget at preserving of the high degree of
debt stability reached in last years;
maintenance of high level of credit ratings of Russia an investment category
with prospect of creation of preconditions for increase of ratings to a category "And";
the further development of the national market of government securities;
provision of constant access of the Russian Federation and national corporate
borrowers to internal and external sources of borrowed capital on acceptable
conditions, minimization of cost of loans;
maintenance by measures of a policy of safe tendencies in sphere of an
external debt of the Russian corporate sector, including restriction of inflow of
speculative capital (hot money).
With a view of preserving of presence of Russia as sovereign borrower on cross-
border markets of the capital and maintenance of constant access to resources of the
international debt markets of the markets during the forthcoming period follows:
To perform placings of eurobonds of the Russian Federation in the limited
volumes taking into account available demand; to create preconditions for attraction
of long-term investors, diversified on types and a geographical sign;
To support constant dialogue with a wide range of global investors.
In the near future it is necessary to pass to much more active national debt
management.
Effective the task decision on minimization of constantly growing expenses
directed on repayment and servicing of the state
Debt, and also management expenses risks inherent in sovereign debt obligations
dictates necessity of transition to practice
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Applications of so-called active operations with a central government debt. Their
main maintenance consists in purposeful influence on indebtedness structure (on the
terms, used currencies and tools, interest rates, etc.). Experience of some foreign
countries shows that in the given context key value has creation of the specialized
market institute under control to the state possessing a necessary kit of powers and
personnel potential. With reference to our country it is a question of Open Society
Russian financial agency (RFA), the decision on which creation it was accepted in
2008 to the Given institute it is assigned a part, on the one hand, "the front-office"
which is responsible for interaction with investors and other participants of financial
markets.
Its activity will be urged to form and support adequate perception investment
community of credit risk of Russia. On the other hand, in the long term to RFA will
pass functions of the basic adviser of the Ministry of Finance of Russia concerning
optimization of structure and decrease in expenses on repayment and servicing of a
central government debt, minimization percentage and currency risks of the federal
budget.
It is planned that RFA will perform on behalf of the Russian Federation internal
and external state loans, that is
To place government securities, and also to perform operations with the given
securities on a secondary market for the purpose of optimization of structure of the
state debt portfolio. In process of creation of necessary preconditions and conditions,
RFA will invest a part of means of the Russian sovereign funds., from my point of
view, from positions of strengthening of debt stability of the Russian Federation
fastening of a limit of a public debt in relation to gross national product in the
constitution of the Russian Federation as it is made in the separate states is
perspective. In the near future it is planned to make, in particular, in Spain and
Portugal.
It is in certain cases reasonable to resort to reducing of the State expenditure by
sequestering. Sequestering - proportional decrease in expenses (on 5 or 10,15 % etc.)
monthly practically in all respects the budget till the end of a fiscal year. The
protected clauses which railroad train is determined by the power supreme bodies
aren't subject to sequestering.
There are also the clauses which sequestering is impossible (interest payment on
a central government debt, etc.).
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The state debt policy of the Russian Federation should be directed on provision
of capability of the Russian Federation to perform loans in the volumes necessary for
the decision of put social and economic tasks, and on the conditions acceptable for
our country as the reliable sovereign borrower. The decision of this task will be
promoted by regular presence of Russia in the capital markets, the transparent and
consecutive auction policy, constant and effective information interaction with
investment community, consecutive expansion of a circle of the investors interested
in placing of means in government securities of the Russian Federation. The volume
of debt obligations before national and foreign creditors should be in the limits
excluding significant deterioration of debt stability of the Russian Federation. The
debt policy should be directed on increase of credit ratings of the Russian Federation
and ability to meet payments provision on a central government debt.
ConclusionPublic debt plays great role in macroeconomic regulation. Public debt level
makes essential impact condition of credit and monetary sphere and rates socially
economic development.
Depending on sphere of placing of loans the public debt is subdivided on internal
and external. The internal public debt is formed as a result of loan of means in thecountry at the population, the enterprise and organizations. Internal loans of the state
in developed countries, as a rule, considerably surpass foreign liability. The capital
export national debt represents the sum of the borrowed funds received from foreign
states, the enterprises, organizations and citizens.
The great value for situation assessment with a public debt has comparison of
size of a public debt with volume of a total internal product (gross national product)
and indebtedness calculation per capita. Here in world economy last years a tendency
abundantly clear: the public debt size in relation to gross national product practically
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in all countries constantly grows, and a number of the countries with the developed
market economy, including in the USA, Greece, Spain, Portugal, Italy and some
other has reached a critical point when there can come a default, that is inability of
the state to pay off on the debt obligations. Thus in countries of Eastern Europe the
situation is slightly better.
Now the Russian Federation in comparison with the majority of the states with
developed market and developing economy has rather public debt low level. As of
July, 1st, 2011 public debt volume of the Russian Federation has constituted 4,6 bln.
rbl., including internal debt3,6 bln. rbl., external debt36,8 bln. dollars of the
USA (it is equivalent to 1,0 bln. rbl.).
However situation in the Russian economy and condition of the federal budget
very strongly depend on a conjuncture of the world raw materials markets. Therefore
maintenance of a moderate debt load is very important strategic task for state bodies
of the Russian Federation.
Its decision will mean preserving of the major competitive advantage of our
country. The reasonable policy in public debt sphere will create conditions for private
sector development, will provide investment appeal of national economy as a whole.
In the near future it is necessary to pass to much more active national debt
management. Thus it is necessary for Russian Federation to strengthen the presence
at the most demanded segments of the external debt markets, for example, placing
eurobonds for long term. At the same time it is necessary to take the measures
directed on destimulation of inflow to national economy of "hot money in shape
Short loans and credits.
Important task is minimization of constantly growing expenses directed on
repayment and servicing of a central government debt. Therefore it is necessary to
manage more actively and more effectively indebtedness structure (on the terms, used
currencies and tools, interest rates, etc.)., from our point of view, from positions of
strengthening of debt stability of the Russian Federation fastening of a limit of a
public debt in relation to gross national product in the constitution of the Russian
Federation or as it is made in the separate states is perspective. The debt policy of the
Russian Federation should be directed to increase of credit ratings of the Russian
Federation and ability to meet payments provision on a central government debt.
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References:
1. Budget code of the Russian Federation2. Concept of public debt management in Russia in 2012-20153. V.G.Gavrilenko. Business dictionary, Moscow, 20054. Explanatory dictionary of market economy, Moscow 20035. Market economy. Reference book, 20026. O
202-204 . (Ministry of Finance)
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