Page 51 - BNE_magazine_07_2020

bne July 2020 Eastern Europe I 51
Russia international reserves have risen from $505.4bn in January to $566.1bn as of the first of June.
MOSCOW BLOG: It's Russia’s cheapest crisis ever and the CBR is still accumulating cash
in the first nine months following the 2008 global financial meltdown, which is said to be less painful than the current coronacrisis.
Likewise, Russia spent $90bn of its $454bn of reserves in 2014 to cushion the blow during the last oil price shock, when both the value of the ruble and the price of oil halved in just a matter of months.
And neither of these two crises come anywhere close to the crises of 1991, when the Soviet Union collapsed, and 1998, when Russia’s financial sector entirely went into meltdown. The end
of communism effective bankrupted the country completely and in the aftermath of 1998 Russia had a mere $8bn in hard currency reserves, much of which was stolen in the form of bailouts for the leading oligarch-owned banks, who promptly whisked the money away into offshore havens.
With a price tag of a mere $7bn, so far this coronacrisis has cost the CBR lunch money and won’t make any noticeable dent in its cash mountain at all.
Golden lining
A large part of the increase in the value of Russia reserves is due to a revaluation of gold, as the CBR has accumulated 2,299 tonnes of the yellow metal as of March this year, which the CBR has valued at $127.6bn as of the start of June, or $17bn more than at the start
of this year. The CBR has been actively
Ben Aris in Berlin
Despite an oil price shock,
a two-month lockdown of the entire Russian economy,
a 20% devaluation of the ruble and an economic bailout package that is worth 10% of GDP, Russia managed to increase its hard currency reserves by $3.8bn between January 1 and May 31.
So far, the coronavirus (COVID-19) is proving to be the cheapest crisis Russia has ever experienced and despite the huge economic shock the economy has received, Russia Inc. is already back
in profit.
The Central Bank of Russia (CBR) has managed to accumulate more than $90.2bn in reserves over the last year, according to the latest data from the Ministry of Finance, and continued
to stash extra cash away even in the midst of the current crisis, albeit at a lot slower pace.
So far the CBR has spent a total of just under $7bn from its collective reserves to deal with the aftermath of the various
shocks that have hit economy, but
that has more than been offset by the appreciation of the two thousand tonnes of gold the central bank holds as part of its cash reserves.
That is an enormous change from previous crises. Russia spent $212.8bn of its $596bn of total reserves to prop up the ruble and bolster the economy
Russia National Welfare Fund vs Gross International Reserves $bn
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