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while securing passage for a less radical ‘maneuver.’ All that said though for the government, asking Russians to contribute more of their earnings to the budget in the mid-term will not increase their appetite for wasteful spending or willingness to put up with corruption from their officials. And the maneuver is exactly that: a ship-steadying change. Notable, but still not the sort fundamental structural reform so often described as necessary.
6.2 Debt
Russia - Gross external debt 2010 2011 2012 2013 2014 2015 2016
Budget: gross debt (LC bn)
4,158 5,343 6,520 7,548 10,299 10,952 8,003
Budget: gross debt (% GDP)
8.98 8.95 9.74 10.62 13.22 13.55 n/a
source: Rosstat
Russia’s total foreign debt increased in 1Q17 to $530bn from $513bn , i.e. by almost $17bn, according to the CBR.
Corporate sector external debt (debt of companies and banks) increased to $473bn from $462bn, i.e. by $11bn. That said, according to the central bank’s comment, this growth in the nominal level of external debt was partly attributable to the effect from revaluation of the non-dollar component of external debt amid appreciation of the ruble other currencies against the dollar.
Firstly, the CBR reduced by $8bn its assessment of corporate foreign debt as of end 2016. This means that in 4Q16, corporate external debt did not increase by $2bn (as we previously thought) but instead fell by $6bn, which seems more logical under conditions of maintained sanctions.
The revision of the CBR’s corporate external debt figures complies with recent changes in the regulator’s estimate of the net capital outflow in 2016 (to $19bn from $15bn).
Secondly, in 1Q17 corporate external debt adjusted for FX revaluation surprisingly increased by $4bn, says Gazprombank . The external debt repayment schedule (even given possible refinancing) envisaged quarterly redemptions of around $12bn.
The actual increase in external debt means that the Russian corporate sector not only managed to fully refinance its existing debt, but also to increase new liabilities. If this unexpected dynamic was not driven by effects from one-off privatization deals (we believe that these effects were reported in the section of other operations of non-financial sectors), this might indicate conclusion of the period of foreign debt repayments, i.e. the absence of pressure from this factor on the capital account (assuming that the CBR does not again revise its external debt estimate).
First Deputy CBR Chair Yudaeva said that the peak in external debt repayments was passed in 1Q17 , which is regarded as a positive signal.
Even in the absence of foreign debt repayments, the net capital outflow was impressive in 1Q17, standing at $15bn, which was driven by an
55 RUSSIA Country Report April 2017 www.intellinews.com