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Tom Kirkman

Russia Needs to Borrow 1 Trillion Roubles More to Cover Revenue Shortfall

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Turns out Putin is swimming naked, despite the proud bluster.  Not often that Russia exposes itself so clearly.

Ignore the obfuscating headline below, and instead pay close attention to understanding the 2nd sentence:

Russia Needs to Borrow 1 Trillion Roubles More to Cover Non-Oil Revenue Shortfall

MOSCOW (REUTERS) - Russia will need more than 1 trillion roubles ($13.44 billion) of additional borrowing this year to cover the shortfall in non-oil and gas revenues, the Interfax news agency cited Finance Minister Anton Siluanov as saying on Saturday.

Speaking on a state television program, the minister also said that 2 trillion roubles are expected to be directed from Russia's National Wealth Fund to cover shortfalls in revenues that do come from the oil and gas sector.

 

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Possibly related:

Poland Says Russia's Gazprom Continues To Overcharge For Gas Despite Court Ruling

Poland said Gazprom, Russia's state-owned natural gas exporter, continues to overcharge it for deliveries in violation of a recent European court ruling.

PGNiG, Poland’s state-owned energy company, last month won a binding arbitration case against Gazprom in a Stockholm court that ordered the Russian firm to reduce its pricing formula for gas exported to the Central European country under an existing long-term contract.

"Gazprom is not honoring the award issued following the long arbitration process, continuing to issue invoices based on the invalid pricing formula," PGNiG said in a statement on April 24.

Poland in 2014 began talks with Gazprom to change the pricing formula for gas imports as the rise of liquefied natural gas (LNG) altered global energy markets.

Following years of unfruitful talks, PGNiG filed an arbitration case against Gazprom.

The Stockholm court on March 30 ruled in PGNiG’s favor, ordering Gazprom to retroactively alter the pricing formula and pay the Polish firm $1.5 billion for overcharging it since 2014.

Poland’s gas-import contract with Gazprom expires in 2022.

PGNiG is seeking to replace Russian gas with imports from other countries. Poland is already importing LNG from the United States.

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All of the "funds" people expect to tap are other financial instruments of questionable liquidity.

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Lot of money literally a 100 million Trouble's - Unfortunate name think its Rubbles so one Trillion Barneys, fair whack of dosh.... 

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Canada runs at least that large of a deficit.

Isn't the "regular" US deficit around 1 trillion USD?  Add COVID bailouts of up to 2 trillion.  Easy 3 trillion deficit in 2020.

 

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Mmmh... Not to sound contrarian, but what is the US deficit right now? And how much is the US going to borrow to fund the current bailouts? 

Answer #1: ~ 250 Trillions ($250,000B) 

Answer #2: not sure yet, but already more than the $1B 2008 rescue package. 

Say again. Who is swimming naked?

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2 minutes ago, Dg56 said:

Answer #1: ~ 250 Trillions ($250,000B)

Sorry, my bad. 

Current US debt is only 22.7 Trillions  ($22,700 B). (Google source) 

Points #3 still valid: who is swimming naked? 

 

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Vladi will have surgery tomorrow to remove his foot from his mouth.

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(edited)

11 hours ago, Tom Kirkman said:

Turns out Putin is swimming naked, despite the proud bluster.  Not often that Russia exposes itself so clearly.

Ignore the obfuscating headline below, and instead pay close attention to understanding the 2nd sentence:

Russia Needs to Borrow 1 Trillion Roubles More to Cover Non-Oil Revenue Shortfall

MOSCOW (REUTERS) - Russia will need more than 1 trillion roubles ($13.44 billion) of additional borrowing this year to cover the shortfall in non-oil and gas revenues, the Interfax news agency cited Finance Minister Anton Siluanov as saying on Saturday.

Speaking on a state television program, the minister also said that 2 trillion roubles are expected to be directed from Russia's National Wealth Fund to cover shortfalls in revenues that do come from the oil and gas sector.

 

This is true, if the current prices will last till the end of 2020, Russia would have shortfall of 40 billion dollars, that is 2.2% of their GDP.

And taking under consideration current Russian foreign reserves and level of government debt, if this situation stays for much longer, they would start to have  some economic problems in early 2030s and in late 2040s their debt could become unsustainable.

The major information for me is that they project the low oil prices will stay till at least early 2021.

Edited by Marcin2
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20 minutes ago, Marcin2 said:

they would start to have  some economic problems in early 2030s and in late 2040s their debt could become unsustainable.

The major information for me is that they project the low oil prices will stay till at least early 2021.

Hi Marcin2,

Which country would not start to have economic problems in 2030 or 2040, if the current economic situation remains?

In the curent context, Russian borrowing is not exceptional, is it? 

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12 hours ago, Tom Kirkman said:

The Stockholm court on March 30 ruled in PGNiG’s favor, ordering Gazprom to retroactively alter the pricing formula and pay the Polish firm $1.5 billion for overcharging it since 2014.

Poland’s gas-import contract with Gazprom expires in 2022.

PGNiG is seeking to replace Russian gas with imports from other countries. Poland is already importing LNG from the United States.

The replacement of Russian natural gas is geopolitically motivated, to decrease impact of Russia on Polish economy and politics . 20% of Polish consumption is domestic production and 80% is imported. 60% of imports is from Russia. Poland will go down as much as possible with Russian imports, limited only by LNG capacit. After current conteact with Gazprom expires it will allow to decrease Russian imports to about 40% of total imports and 30% of consumption in 2023.

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1 minute ago, Dg56 said:

Hi Marcin2,

Which country would not start to have economic problems in 2030 or 2040, if the current economic situation remains?

In the curent context, Russian borrowing is not exceptional, is it? 

It was meant to be a joke ( although my predictions about 2030s are based on sound analysis of Russian economy) cause Russia is not vulnerable at all for current situation at global oil markets, not in the matter of months or even a few years.

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US 2020 deficit already at ~3.7 trillion USD.

https://app.tmxmoney.com/news/cpnews/article?locale=EN&newsid=f53149&mobile=false

"The latest, and dire, projection from the Congressional Budget Office, released Friday, states the U.S. deficits will mushroom to $3.7 trillion in 2020, fueled by the four coronavirus relief bills signed into law by President Donald Trump. A fifth bill is already in the works, and will be "expensive," according to House Speaker Nancy Pelosi, D-Calif."

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(edited)

On 4/26/2020 at 7:13 PM, Enthalpic said:

US 2020 deficit already at ~3.7 trillion USD.

https://app.tmxmoney.com/news/cpnews/article?locale=EN&newsid=f53149&mobile=false

"The latest, and dire, projection from the Congressional Budget Office, released Friday, states the U.S. deficits will mushroom to $3.7 trillion in 2020, fueled by the four coronavirus relief bills signed into law by President Donald Trump. A fifth bill is already in the works, and will be "expensive," according to House Speaker Nancy Pelosi, D-Calif."

"A fifth bill is already in the works, and will be "expensive," according to House Speaker Nancy Pelosi, D"

Nancy wants $500 Billion bail out for the states that has very little due to a 2 month virus shutdown. 

Just like the $800 Billion 2009 Democratic recovery act for "Shovel Ready" construction bailed out the large state budget deficits , not going to construction.

Nobody talks about it but the state Pensions are under funded to the tune of $1.5 Trillion !   Who's going to pay for that ?  You can guess who the main offenders are .  .  .  NY, CA., and Illinois.  

Notice Trump didn't mandate a Federal Countrywide quarantine that NY Gov Cuomo was pushing for.  Cuomo wanted so he could make a case that the Feds made him shut down and therefore needs to bail out his state as a result.

Edited by BLA
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In January 1996 the ruble was trading at 4.7 to the US dollar.   Today it is sitting at 74 to the dollar.  the peak was a few months ago at 87 to the dollar.  

The purchasing power of the Ruble has sunk by a factor of 16 to 1, in 24 years.  That is a disaster for the average Russian.  Their money is not buying anything on the worlds stage.  The collapse of the Ruble seems to parallel the rise of the Oligarchs and their looting of the country, and that includes the very active participation of Mr. 50% himself, good old Vladimir.  Just lovely. 

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6 hours ago, Enthalpic said:

Canada runs at least that large of a deficit.

Isn't the "regular" US deficit around 1 trillion USD?  Add COVID bailouts of up to 2 trillion.  Easy 3 trillion deficit in 2020.

 

1 trillion for an economy their size is considerably large. Maybe you'll notice the difference in GDP. 

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6 hours ago, Dg56 said:

 

Sorry, my bad. 

Current US debt is only 22.7 Trillions  ($22,700 B). (Google source) 

Points #3 still valid: who is swimming naked? 

 

The one who's bonds don't sell.

Who's currency is exchanged according to oil prices, and who's people's food gets exported out of their country when the currency falls. 

The one who taps their national wealth fund for nearly 30% of its value, spends reserves to prop the currency and can't sell bonds at any interest rate. 

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1 minute ago, 0R0 said:

The one who's bonds don't sell.

Who's currency is exchanged according to oil prices, and who's people's food gets exported out of their country when the currency falls. 

The one who taps their national wealth fund for nearly 30% of its value, spends reserves to prop the currency and can't sell bonds at any interest rate. 

Go easy on him 😂 this stuff isn't common knowledge. 

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2 hours ago, BLA said:

"A fifth bill is already in the works, and will be "expensive," according to House Speaker Nancy Pelosi, D"

Nancy wants $500 Billion bail out for the states that has very little due to a 2 month virus shutdown. 

Just like the $800 Billion 2009 Democratic recovery act for "Shovel Ready" construction bailed out the large state budget deficits , not going to construction.

Nobody talks about it but the state Pensions are under funded to the tune of $1.5 Trillion !   Who's going to pay for that ?  You can guess who theain offenders are .  .  .  NY, Ca., and Illinois.  

Notice Trump didn't mandate a Federal Countrywide quarantine that NY Gov Cuomo was pushing for.  Cuomo wanted so he could make a case that the Feds made him shut fown and therefore needs to bail out his state as a result.

I would bet that Trump figures out how to drag the state aid so that the total shutdowners go broke before the money shows up. Use that to minimize their payouts, direct where it goes away from the state budget, and force the gov's to open up whether they want to or not. 

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6 hours ago, Marcin2 said:
18 hours ago, Tom Kirkman said:

Turns out Putin is swimming naked, despite the proud bluster.  Not often that Russia exposes itself so clearly.

Ignore the obfuscating headline below, and instead pay close attention to understanding the 2nd sentence:

Russia Needs to Borrow 1 Trillion Roubles More to Cover Non-Oil Revenue Shortfall

MOSCOW (REUTERS) - Russia will need more than 1 trillion roubles ($13.44 billion) of additional borrowing this year to cover the shortfall in non-oil and gas revenues, the Interfax news agency cited Finance Minister Anton Siluanov as saying on Saturday.

Speaking on a state television program, the minister also said that 2 trillion roubles are expected to be directed from Russia's National Wealth Fund to cover shortfalls in revenues that do come from the oil and gas sector.

 

This is true, if the current prices will last till the end of 2020, Russia would have shortfall of 40 billion dollars, that is 2.2% of their GDP.

And taking under consideration current Russian foreign reserves and level of government debt, if this situation stays for much longer, they would start to have  some economic problems in early 2030s and in late 2040s their debt could become unsustainable.

The major information for me is that they project the low oil prices will stay till at least early 2021.

That is just a couple of % points. but it is also just the start. It is the unpaid bills so far. But they are having a shutdown too. And their economy is 40% oil and gas. That means that what is ahead is far bigger than what has already come due. 

Russian oil and gas sales would then have to had been near 1.5 mob/d at $25/Bbl in Apr in order to produce that deficit of  1 T Rubles in one month. Meaning that they are getting clogged up in a big way. Gas and LNG sales I have not seen, but they were reduced since the start of the year when LNG collapsed. 

https://oilprice.com/Latest-Energy-News/World-News/Russia-Cuts-European-Sea-Ports-Oil-Exports-To-20-Year-Low.html

I don't expect that they would use the remaining oil at the normal domestic rate either, nor be able to ship anything like the quota they negotiated. 

image.png.67bf32bd9f27f974356f70e6d4e25db9.png

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5 hours ago, BLA said:

"A fifth bill is already in the works, and will be "expensive," according to House Speaker Nancy Pelosi, D"

Nancy wants $500 Billion bail out for the states that has very little due to a 2 month virus shutdown. 

Just like the $800 Billion 2009 Democratic recovery act for "Shovel Ready" construction bailed out the large state budget deficits , not going to construction.

Nobody talks about it but the state Pensions are under funded to the tune of $1.5 Trillion !   Who's going to pay for that ?  You can guess who theain offenders are .  .  .  NY, Ca., and Illinois.  

Notice Trump didn't mandate a Federal Countrywide quarantine that NY Gov Cuomo was pushing for.  Cuomo wanted so he could make a case that the Feds made him shut fown and therefore needs to bail out his state as a result.

$1.5 trn and RISING RAPIDLY! Still, that is peanuts compared to underfunding of medicare and pensions at fed level, there u talkin 10's of trillions.

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3 hours ago, 0R0 said:

The one who's bonds don't sell.

Who's currency is exchanged according to oil prices, and who's people's food gets exported out of their country when the currency falls. 

The one who taps their national wealth fund for nearly 30% of its value, spends reserves to prop the currency and can't sell bonds at any interest rate. 

That could be the US and Europe as well in 5-10 years time?

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7 hours ago, BLA said:

Nobody talks about it but the state Pensions are under funded to the tune of $1.5 Trillion !   Who's going to pay for that ?  You can guess who the main offenders are .  .  .  NY, Ca., and Illinois. 

COVID is reducing the number of people collecting pensions.

A good pension is unlimited money if you live forever... or a couple hundred thousand at most if you die young.

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(edited)

11 hours ago, Jan van Eck said:

In January 1996 the ruble was trading at 4.7 to the US dollar.   Today it is sitting at 74 to the dollar.  the peak was a few months ago at 87 to the dollar.  

The purchasing power of the Ruble has sunk by a factor of 16 to 1, in 24 years.  That is a disaster for the average Russian.  Their money is not buying anything on the worlds stage.  The collapse of the Ruble seems to parallel the rise of the Oligarchs and their looting of the country, and that includes the very active participation of Mr. 50% himself, good old Vladimir.  Just lovely. 

 

Russia had deep financial crisis in 1998 and defaulted on its debt.

So at the beginning of Putin reign in Feb 2000 exchange rate was 28.5 RUB / USD

14 years later in Feb 2014 it was 34.5

Later Russia invaded Crimea and Eastern Ukraine and US answered with sanctions and attack on Roubel that increased  the rate immediately to 70-80 level.

Russia has problem with high inflation but most of the time it is the most stable autarkic regime on Earth. And the lady at the helm of their Central Bank is very clever.

It is a pity for all Russians, a lot of sympathy, cause you have No chances at least till Putin dies

They play chess , they are always prepared for 5 years of difficult times so we cannot starve them, or destroy their economy. 
Current sanctions against Russia hurt mainly EU, so US keeps them. Good sanctions would be against Russian Oligarchy, hit their global economic interests,I think then  they would leave Eastern Ukraine but nit Crimea.

Edited by Marcin2
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If US would want ever really hurt interests of Russian oligarchy they would ban any person with Russian citizenship to own any assets in NAFTA. Give them 3 years period to sell all of them. Problem of Russian property held under different name could be easily solved. Any person buying any property from any Russian national After 3 years period would have it automatically forfeited .

Current sanctions only hurt Russian poor.

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