Will there be a default in 2020 in Russia

Not so long ago, the population of Russia, through their own bitter experience, felt what default was. The dire financial crisis of 1998 affected almost every Russian family. The collapse of the national currency and as a result a sharp rise in prices, non-payment of salaries and benefits, unemployment - all this plunged the bulk of the population into poverty. And although most of the Russians in the present time live from paycheck to paycheck and do not have any special savings, the fear of a default is firmly settled in people's minds. Mass stuffing in social networks that the collapse of the ruble will be in 2020, further fuel the pessimistic mood in society.

Economic policy of the current government

To enter the five largest economies in the world by 2024 - this is the vector of economic policy of today's leaders. To implement the plan, the government needs to tighten GDP at purchasing power parity. Now Russia ranks sixth in this indicator in the world ranking. Government officials vigorously declare that the task is feasible, as economic growth has a positive trend, despite the restrictive US sanctions.

In addition, the external debt that led the country to the 1998 crisis is negligible today. Over the past ten years, Russia has paid off almost all of its debts, including paying off the state debt of the Soviet Union. On the other hand, the economy is still heavily dependent on energy prices. And although this dependence has weakened a little lately, a sharp drop in oil and gas prices may well lead to a financial crisis.

The government is trying to strengthen the economy through the following programs:

  • development of the manufacturing sector of the economy;
  • import substitution;
  • increase in tax rates;
  • containment of inflation;
  • increasing the number of workers through pension reform;
  • improvement of the demographic situation.

Whether such a policy will be effective, whether it will lead to the intended goal and whether it will save the Russian economy from default, time will tell. In the meantime, leading economists and analysts of the world put forward completely different versions in this regard.

For information. In 2018, Russia's economy took only 12th place in terms of GDP. Canada and South Korea were in tenth and eleventh positions respectively. The leading position according to the World Bank took the United States.

Forecasts by authorities and the public

News about the possible approach of a new world crisis in the summer of 2018 was posted on its official website by the World Bank International Financial Organization. According to the World Bank, in the long term, a wave of financial crisis will sweep the world economy in 2-3 years. For Russia, this will be the strongest negative factor, which, coupled with Western sanctions, could lead to the devaluation of the ruble.

However, already in December 2018, Andras Horvai, the World Bank’s permanent representative in the Russian Federation, said in the “Report on the Russian Economy” that everything was not so bad. According to economists, the growth rate of the Russian economy for 2018-2020 will range from 1.5% to 1.8%. And in the future, according to the director of the bank, the pace can reach 3%. The head also noted that despite the great influence of the world economy, the competent economic policy of the authorities remains a key factor in the economic stability of the Russian Federation.

Raiffeisenbank analysts are also pessimistic. The outflow of capital due to US sanctions, insufficient funds to pay the remaining government debt, unstable oil price - all this threatens the Russian economy. Experts believe that default can be avoided if the oil price is close to 100 rubles, which is unlikely.

Representatives of the Russian government refute the likelihood of default in Russia in 2020. The country's chief financier Anton Siluanov, referring to official data, confirms that for the first time in the past few years, budget revenues have exceeded spending. At the same time, in 2020 the budget surplus is expected to reach 1.22 trillion. rubles, and in 2021 - 0.95 trillion. rub. It is difficult to judge whether such a “financial cushion” will protect the country's economy from fluctuations in oil prices and ever-increasing Western sanctions. However, all government work is aimed at developing the domestic economy at an accelerated pace. The President set the task until 2020 to bring the pace of economic development to a level above the global average. The development plan was prepared by the Cabinet of Ministers and has already begun to be implemented.

A spokesman for the Russian president Dmitry Peskov, when asked about the possible threat of a large-scale economic crisis in the country, said that everything would probably be fine and should not be expected to default.

Dmitry Peskov

Lessons from the Past: 1998 Default

The financial crisis of twenty years ago was the logical consequence of the failed economic policy of the government. Attracting borrowed funds for a long time and the inability to correctly calculate their financial capabilities has become one of the main reasons for default. Inflated budgets in the "life on credit" led to the inability to make timely payments on debts and to fulfill the obligations undertaken by lending.

Illiterate tax policy with suffocating rates prevented the development of small and medium-sized businesses. Therefore, the beginning of the development of a market economy in the country almost immediately led to a budget deficit of 29.4% of GDP. The situation was aggravated by state short-term bonds. Almost all of the country's financial resources were involved in the GKO financial pyramid. Revenues from speculation with bonds were so profitable (up to 140% per year) that investors stopped investing in real sectors of the economy. In the end, the bloated soap bubble burst by August 1997. The state was unable to pay debts.

From external world factors, the impetus for the financial collapse was the crisis in southeastern Asian countries. The highest growth rates over 10 years ended in the collapse of stock markets and currencies. Following the collapse of the Thai currency in 1997, the currencies of other Asian countries quickly depreciated. According to experts, the cause of the southeast crisis was the inefficient spending of borrowed funds. The International Monetary Fund tried to help stabilize the currencies of the countries, providing significant support in the form of finances and proposing programs to overcome the crisis. But to prevent the impact of the Asian crisis on the world economy failed.

For information. A slight decrease in the Russian ruble resulted in an almost complete depreciation. In August 1998, the ruble against the US dollar was 6.29 rubles. for the dollar, September 1, 1998 - 9.33 rubles., October 1 - 15.91 rubles., and January 1, 1999 already 20.65 rubles.

Watch the video: Russian PM warns Kiev over debt default (April 2020).

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