Our state is not only a huge empire, but also a major player in the financial markets both domestically and globally. What is the national debt of Russia?
If we consider the public debt as the total obligations of the state to organizations, legal entities and citizens, that is, individuals, within the country, then we are talking about internal debt. Speaking of debt to international companies and foreign countries, we mean external debt.
In international practice, external debt is also defined as total debt to non-residents, and domestic debt to residents.
Why does the state become a debtor
Lack of funds leads to the formation of internal and external public debt of Russia. People have a shortage of money; within the country there is a state budget deficit. If the population and organizations in the country and abroad have free funds, the country takes money to cover its needs, and a debt is formed.
On the other hand, the presence of debt stimulates economic growth …
Debt Forms
- Credit agreements and contracts between Russia and foreign banks, financial organizations.
- Issued Russian securities.
- Contracts for the provision of state guarantees by Russia, a guarantee agreement to secure obligations undertaken by third parties.
- Obligations of third parties reissued into the state debt of the Russian Federation on the basis of legislation.
- Agreements on the extension and restructuring of the country's debt obligations of previous years.
External public debt of Russia
There is a special program within the framework of which the size and structure of Russia's external obligations are determined. It indicates the sum of the total external loans of Russia and state loans issued by our country.
The program, which reflects all loans and guarantees, the amount of which exceeds $ 10 million for the entire loan term, is approved together with the country's draft budget for the upcoming fiscal year. It describes the goals, sources, terms of repayment, the amount of borrowing.
The Government of the Russian Federation may borrow additional funds not specified in the program, if this helps to reduce the cost of paying interest on the existing debt, in other words, on servicing it.
What external debts to the West do Russia have today?
- The largest public debt of Russia to commercial credit organizations of Western countries with state guarantees is regulated by the Paris Club, which consists of the main creditor countries.
- Loans from Western commercial banks, issued by them independently, without state guarantees. Regulated by the London Club.
- Debt to commercial structures for the supply of goods and payment for products.
- Debt to international monetary organizations.
Russian domestic debt
There are three types of domestic debt. Firstly, federal, secondly, obligations of enterprises and corporations under the responsibility of the state, thirdly, debts of municipal authorities to citizens and utilities.
Solving the problem of domestic debt
Full repayment of domestic debt is impossible and not necessary, as this will freeze cash flow within the country. The measures to reduce the level of debt are taken as follows.
- Active development of the domestic securities market, attempts to enter the international arena.
- Formation of programs to attract foreign investment.
- Rationalization of federal budget expenditures.
The domestic public debt of Russia is expressed in securities and begins its calculation in 1993, then it was estimated at 90 million rubles.
From January 1 of this year, according to the new federal budget, the ceiling of the Russian government debt of 2018 has been established. Its size is 10.5 trillion rubles, while the level of budget revenues is planned to be in the amount of 15.26 trillion rubles.
As of January 1, 2018, total domestic debt amounted to 7 trillion 247.1 billion rubles, of which 59.1% were government bonds with fixed income. According to official data for 2017, the level of domestic debt increased by almost 20%, in fact by 1 trillion 146.78 billion rubles - new government bonds were issued, due to which in 2017 more than 1 trillion was received in the Russian budget. 750 billion rubles.
How much can you take
At each level, the law regulates the maximum amount of borrowed funds to cover the budget deficit.
In particular, for a constituent entity of the Russian Federation, this amount should not go beyond thirty percent of its budget revenues this year. This does not include financial assistance from the federal budget and loans for the current year. For municipal facilities, this highest line is 15%.
The cost of servicing (paying interest) the state debt of a constituent entity of the Federation or a municipality should not exceed 15% of the total cost of their budgets.
Classification
Debts are divided by the currency criterion:
- domestic - ruble debts;
- external - currency;
By objectives:
- capital - the aggregate of all outstanding debt with interest;
- current - debts to be covered this year, income on issued securities, with interest.
By the criterion of urgency (cannot exceed a 30-year period):
- short-term - up to 12 months;
- medium-term - not exceeding 5 years;
- long term.
By management level:
- public debt of Russia;
- subject of the Russian Federation;
- debt at the municipal level.
The subjects of the Russian Federation and municipalities bear independent responsibility for their debts, are not liable for debts for each other (if they were not charged under an additional agreement). The Russian Federation is not responsible for their debts, nor are they liable for the country's debt.
USSR debt restructuring
The debt of our country to the Paris Club of creditors at the end of 1991 amounted to 37.6 billion dollars. At the beginning of 1992, the amount of Russia's foreign liabilities amounted to 57 billion US dollars, at the beginning of 1993 - about 97 billion. By the end of 1993, total external domestic debt increased to $ 110 billion, the number of new loans issued in favor of Russia from international financial organizations increased. Such a rapid increase in debt caused the state budget deficit, the deterioration of the price conditions of foreign trade, and a reduction in exports.
In 1994, Russia took over the entire debt of the USSR in exchange for foreign assets. Accordingly, all the former USSR debtor countries were exempted from paying debts, Russia became “responsible” for all.
In 1996, Russia and the Paris Club of creditors signed a Memorandum on the restructuring of all external debt of the USSR. Now, Russia's obligations to the Club totaled $ 38 billion.
External public debt of Russia by years:
| Year | Debt, billion US dollars |
|---|---|
| 1991 | 67.8 |
| 1997 | 123.5 |
| 2000 | 158.7 |
| 2001 | 143.7 |
| 2002 | 133.5 |
| 2003 | 125.7 |
| 2004 | 121.7 |
| 2005 | 114.1 |
| 2006 | 76.5 |
| 2007 | 52.0 |
| 2008 | 44.9 |
| 2009 | 40.6 |
| 2010 | 37.6 |
| 2011 | 36.0 |
| 2012 | 34.7 |
| 2013 | 54, 4 |
| 2014 | 61.7 |
| 2015 | 41.6 |
| 2016 | 30.8 |
| 2017 | 51, 2 |
Debt management
- Change in loan yield.
- Consolidation - the combination of several loans.
- Deferral to repay the obligation.
- Restructuring, structural changes in debt (short and expensive debts for long and cheap).
How can I use the external public debt of Russia:
- the most effective method is to finance state economic projects, investments;
- financing a budget deficit, servicing its current expenses is a less preferred option;
- a mixed version of the first and second.
An example of effective external debt management
The agreement on the repayment of the Mongolian debt to Russia in the amount of 11.5 billion dollars. In 2002, Russia proposed that Mongolia write off 70% of the debt, and pay off the remaining 30% with commodity deliveries and the provision of blocks of shares in Mongolian enterprises. Already 49% of the company's shares are owned by the Russian mining company ERDE NET, and soon a controlling stake in this company will belong to our country, and at the same time half of the global nickel market.
