Voices from Russia

Monday, 26 February 2018

What Sanctions? Russia’s Investment Rating Upgraded

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On 23 February 2018, Standard and Poors raised its estimation of Russia’s sovereign credit rating from BB+ to BBB-. This is good news for the Russian Federation as it continues to realign its economy in response to the various sanctions that the West (mainly the USA) imposes on the nation. Under President Putin’s leadership, Russia gradually improved since the peak of the sanctions crisis near the end of 2015. The rating change means that S&P no longer considers Russia as “junk” investment territory. The Financial Times reported that S&P attributed the upgrade to the country’s “prudent policy response” taken in response to the sanctions. The analysts further said this:

The ratings are supported by Russia’s commitment to conservative macroeconomic management, its strong net external asset position, low government debt, and relatively high monetary flexibility, including a flexible exchange rate. The ratings are constrained by our assessment of Russia’s economy, which remains dependent on revenues from oil and gas exports, as well as by wider institutional and regulatory weaknesses. Further constraints include geopolitical tension, and resulting international sanctions, creating a drag on Russia’s long-term economic growth prospects.

The S&P rating lift takes Russia into stable investment territory. Another analytics agency, Fitch Ratings, affirmed Russia’s long-term foreign and local currency issue default ratings, also at “BBB-” with a Positive Outlook:

Russia’s ratings balance a strong sovereign balance sheet, robust external finances, and an improved policy framework against weaker macroeconomic performance than peers, structural weaknesses (commodity dependence and governance risks), and geopolitical tensions. The Positive Outlook reflects continued progress in strengthening the economic policy framework underpinned by a more flexible exchange rate, a strong commitment to inflation-targeting, and a prudent fiscal strategy. These policies contribute to improved macroeconomic stability and, together with robust external and fiscal balance sheets, increase the economy’s resilience to shocks. The estimated federal budget deficit narrowed to 1.5 percent of GDP in 2017, less than half the 2016 out-turn and well below the BBB median. The non-oil deficit shrank to 7.9 percent of GDP in 2017 from 9.1 percent in 2016. Fitch forecasts that Russia will post a fiscal deficit of 0.6 percent in 2018 (outperforming the budgeted 1.3 percent deficit), reflecting higher-than-budgeted oil prices, continued non-oil and gas revenue growth, and expenditure restraint. It should achieve the current official 2019 primary balance forecast comfortably, with Fitch forecasting surpluses at both the primary and overall levels.

The rest of the report is similarly quite positive. It’s an interesting point that many Russian businesses are grateful for the opportunities created by the sanctions even though they had the intent to hurt and punish Russia for whatever cause célèbre the West could dream up. Whatever doesn’t kill you only makes you stronger, doesn’t it?

25 February 2018

Seraphim Hanisch

Russia Feed     

http://russiafeed.com/what-sanctions-russia-investment-rating-got-upgraded/

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Tuesday, 16 January 2018

Experts Say FIFA World Cup Will Bolster Russian Beer Market

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Data provided by Morgan Stanley showed that the upcoming 2018 FIFA World Cup in Russia this summer would boost beer consumption. It estimated football fans’ impact on beer consumption at 2 percent. As a result, it expects that Russia’s beer market would grow during 2018, for the first time in a decade. The Russian Brewers’ Union confirmed that beer sales in Russia, which declined steadily over the past few years, could indeed grow in 2018. Kirill Bolmatov, Corporate Relations Director at Heineken Russia said:

To begin with, there’s no bad news. The excise duty didn’t rise in 2018, nor were there any new restrictions. Non-alcoholic beer made a substantial contribution, which is the most promising segment now.

According to the Russian Brewers’ Union, despite a decrease in beer consumption, sales of non-alcoholic beer grew by 5.6 percent from January to September 2017. Oraz Durdyev, Legal and Corporate Affairs Director at SUN InBev, a subsidiary of Anheuser-Busch InBev, pointed up:

Football can be of help as well. As a rule, during World Cups, beer consumption in a host country grows by about 5 percent. Largely, this is due to the established consumption culture in Western countries, because beer is always associated with football.

Pavel Filippov, PR manager at Efes Rus said:

In addition to that, the event will be in the summer, which is the peak season for brewers.

11 January 2018

TASS

http://tass.com/pressreview/984567

Thursday, 23 March 2017

Rolling Blackouts Announced in Seven Ukrainian Oblasts

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On 22 March 2017, Ukrenergo announced rolling electrical blackouts in seven Ukrainian oblasts. If alternative supplies of coal don’t materialise soon, the Ukraine will begin earlier-announced major electrical blackouts. Today, Ukrenergo Acting Director Vsevolod Kovalchuk told journalists in Kiev:

If new coal supplies aren’t forthcoming, we may have to implement the plan we spoke of in February [serious limitation of energy consumption: Aleksei Zhuravko]. At present, the power stations are working normally, based on coal reserved stockpiled prior to the blockade. We can manage until the early spring due to conservation measures at coal-powered power stations [that is, power blackouts and brownouts: editor].

Previously, media reports stated that power blackouts in case of a negative scenario would occur in seven oblasts… Kharkov, Dnepropetrovsk, Kiev, Chernigov, Zaporozhye, Sumy, and Cherkassy. Governmental authorities in these areas are responsible for organising ad hoc departments to deal with this emergency in the power sector. Yesterday, Ukrainian Prime Minister Groysman stated that the Ukraine is exploring the possibility of buying coal in the USA, Australia, and South Africa. Because of the trade embargo with the LNR and DNR, coal reserves at Ukrainian power stations are close to zero. Previously, Groysman stated that the Donbass blockade would cause the loss to the Ukrainian state budget of 3.5 billion USD (201.43 billion Roubles. 24.11 billion Renminbi. 229.2 billion INR. 4.67 billion CAD. 4.6 billion AUD. 3.25 billion Euros. 2.8 billion UK Pounds) and idle 75,000 workers. The State National Commission for Energy and Utility Regulation will increase the wholesale market price for electricity by 1 percent, instead of the previously-announced decline of 5.8 percent, due to cost increases mandated by the purchase of imported coal.

22 March 2017

Aleksei Zhuravko

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Sunday, 19 February 2017

“Deadlock”: Donbass Blockade Risks Plunging the Ukraine into Energy Collapse

00 dnr donetsk pr coal train 150915

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On Friday, Ukrainian President P A Poroshenko enacted a decree earlier adopted by the National Security and Defence Council on diversification of coal supply sources and creating reserves of power generating coal. In addition, the Council also decided to tighten control over the products’ movement in the Donbass region. It mandated that the government develop measures to neutralise threats to Ukrainian energy security and imposing a ban on anthracite exports from Ukraine. It also puts the government in charge of rebuilding transportation infrastructure damaged during the military operation in the Donbass.

In late December 2016, a so-called Ukrainian “volunteer fighters group” declared a trade and economic blockade of the Donetsk People’s Republic (DNR) and Lugansk People’s Republic (LNR). According to the group, any trade operations with the LNR or DNR are illegal. The blockade resulted in disruptions in anthracite shipments from the Donbass Peoples Republics and forced the Ukraine to introduce a state of emergency in the energy sector. On Monday, Energy Minister I S Nasalik said that the country’s reserves of coal for energy-generating power plants might dry up in 45 days if they don’t lift the blockade. Russian journalist and industrial expert Leonid Khazanov emphasised:

The measures Kiev is taking are insufficient to resolve the energy conundrum. The Ukraine is risking plunging into an energy catastrophe, with everything that implies for its people and the Ukrainian industrial sector. However, if [the government] wanted to fight radicals they would’ve taken real measures, not just a decree. It seems that President Poroshenko has no control over the situation on the railways or he fears an escalation. Kiev could compensate for the coal shortage with supplies from Russia and other countries. However, the Ukraine lacks financial resources and the West is unlikely to come to its help in this situation. The question now is where to buy coal. One option is to buy supplies from Russia. Other variants include other foreign markets, but they’re more expensive than shipments from the Donbass or Russia. If the Ukraine decides to find other foreign suppliers, not all of them would agree to work with Kiev due to its financial difficulties. The Ukraine doesn’t have the money to afford such shipments. They could ask for help from the IMF or the USA. However, I don’t think they would give them the money. Western politicians are pragmatic. What can Poroshenko give them in exchange? His loyalty [to the West] isn’t enough. The situation in the Ukrainian energy sector is in deadlock. Maybe Kiev should initiate dialogue with the Donbass or ask help from Russia, but Kiev-Moscow ties are very tense now. As I see it, the Ukraine is nearly at a standstill.

19 February 2017

Sputnik International

https://sputniknews.com/europe/201702191050837470-ukraine-donbass-energy-crisis/

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