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As estimated by the investment company ATON. See Vneshnii dolg prirastaet dolgamy goskompanii (The external debt of Russia is being pumped up by the debts of state companies), www.svobodanews.ru, 5 October 2008. Nevertheless, it should be noted that accurate estimation of the external indebtedness of state companies is associated with certain difficulties - firstly, because of the absence of consolidated public registers and, secondly, because of the existence of methodological discrepancies. The Central Banks corresponding statistics concerning the external debt (for a detailed analytical representation for the year 2008, see www.cbr.ru/statistics) treat it separately for the state and private sectors, while including into the state sector only those banks and nonfinancial enterprises where state - administration and monetary - accommodation bodies directly or indirectly own a no less than fifty-percent stake, or otherwise control them. All the other state companies (with mixed ownership) should apparently be included in the private sector. If we surmise that all the main debtors with a state stake of more than 50 % are classed in the State Banks statistics with the state sector, the total amount of the external corporate outstanding debt of state companies and banks would turn out to be much less than the one universally accepted by the community of experts (141.9 billion USD or 34.7% of the joint external indebtedness of banks and companies of the state and private sectors as of 1 April 2008). It should be noted that the debts of just two of the non-financial enterprises directly answering to the Central Banks definition Gazprom and Rosneft (86 billion USD in total) have already considerably exceeded the total amount of outstanding debt of non-financial enterprises within the framework of the state sector (74.5 billion USD). Thirdly, what we see is, in fact, a practice of double entry, because, according to estimates, part of the funds classified by the Central Bank as external debt actually represents internal credits within the framework of groups (or holding companies), by their economic content absolutely unrelated to external indebtedness.

Nevertheless, various measures at regulating (limiting) the external indebtedness of companies have been repeatedly discussed since 2005. From the point of view of the Ministry of Finance, the State must bear certain responsibility for the activities of such companies by developing single approaches to the external and internal debts of such companies. External borrowing should not be prohibited as such, but should be limited in qualitative terms and be replaced, whenever possible, by borrowing on the internal financial market23. Certain hopes were pinned on the state representatives in boards of directors. As the issue of attracting loans is closely connected with the proportions of distributing the net profit of companies (payment of dividends to shareholders, including the State), specific documents concerning the creation of a single system of borrowing and a single dividend policy were being developed. On the whole, by mid-2008, no regulation and unification of the said processes had been achieved. Moreover, the administrative restriction of state companies access to foreign sources of debt financing can hardly be considered as an efficient anti-inflation mechanism. The issue of state holding companies external loans should be resolved in another vein through determining their place in the system of the States priorities, through achieving transparency of the flows of funds, and through efficient management of core assets.

As is known, a considerable proportion of the leading state companies outstanding debt was related to their 2005 07 transactions on the corporate control market. In other words, a high percentage of the attracted funds was spent not on the development of the existing businesses, but was involved in the process of the new redistribution of property, which consisted in the buying-up of assets, in changing the structure of share capital, etc. In contrast to the previous phase of property redistribution based on the use of force and coercion (take, for example, the Ukos case), its new phase, spearheaded by state companies and companies enjoying political support of the State, is characterized by a mixture of market principles and force. Assets are sold not on a completely voluntary basis, but at a price which is close to the market one (it will suffice to mention the case of acquisition of the fifty - percent stake in the Sakhalin-2 project). As a result, the process of transition to the state - capitalism model conduces to market growth and attraction of investments. In conditions of a favorable macroeconomic situation and sound liquidity, state companies were actively attracting credit resources for the sake of purchasing new assets, which in its turn conduced to the companies further capitalization24.

Although the State does not guarantee formally the debts of mixed-sector companies, their debts, nevertheless, are treated as de-facto sovereign. Moreover, investing in them is becoming a source of practically guaranteed profits, because of the States expressed readiness to support these companies both by means of applying force and politically, as well as in the sphere of state regulation (the program of increasing the price of natural gas for domestic consumers). This makes Russian shares extremely popular in the eyes of offshore hedge funds, for whom the worsening of the institutional environment (first of all, the policy of double standards) in Russia brings about additional profits. At the same time, foreign banks are willingly allotting low - interest credits to state companies, which the latter use for purchasing more and more assets (it should be noted that the indebtedness of private borrowers significantly increased in Q2 2008, that is, in conditions of the already materialized global financial crisis).

It is apparent that such a model of market growth is in many respects speculative, because it does not involve considerable investments in production25; its existence is possible only when there is an influx of funds into developing markets and when the profits of companies grow because of the rising prices of their products and of the assets being redistributed in their favor. Moreover, this speculative market growth conceals the actual problems and disproportions of the economy dealing with the worsening (as the States expansion in the economic sphere increases) of the institutional environment. It should be reminded that in mid-2008, ten most heavily capitalized companies accounted for 66% of RIA Novosti, 8 December 2005.

For further details, see Abramov, A., Radygin, A., Rogov, K. Model razvitiia: Lovushka goskapitalizma (Model of development: the trap of state capitalism) / Vedomosti. 9 April 2007. P. A4.

According to A. E. Abramov (whose estimates are based on the data released by stock exchanges and Rosstat), over the period from 2005 to the first half-year 2008 inclusive, the share of invested proceeds from the issuance of corporate bonds fluctuated in the range between 0.4 and 2.2%. Only slightly better was the situation with the use of funds attracted by companies and banks in the process of IPOs. In the most successful (from the point of view of its volume) IPO of the year 2007, of the 33 billion USD yielded by initial and secondary offerings of shares, only 3.6 billion or 10.9% was directed to increasing the volume of real capital.

capitalization of the Russian market, with the oil and gas extraction and procession sector accounting for 50% of capitalization26. A gigantic proportion of capital influx becomes connected with the narrow sector of leading companies politically supported by the State, while the redistribution of investments in the economy is being hampered by the drawbacks of the institutional environment.

Judging from the measures being discussed with respect to rescuing Russian companies and banks, it is absolutely clear that this model is being projected on the situation of the 2008 financial crisis as well. Of the aggregate package of anti-crisis measures adopted by the RF authorities in September and October of 2008, at least the following two are worthy of special mentioning with regard to the issues of widening the state sector: the States credits to servicing the foreign creditors of Russian companies and banks (50 billion USD in 2008) and the direct (anti-crisis) intervention of the State on the stock market (175 billion rubles in 2008 and 2009 each). Another 450 billion rubles should be transferred from the National Prosperity Fund to the deposits in Vneshekonombank (Development Bank) for the subsequent allocation of 225 billion rubles to investment in the banking system for the purpose of co-financing the planned increase in capital.

According to the existing data27, in Q4 2008, the amount of Russian companies repayments on external loans is estimated at 47.5 billion USD, and in the year 2009 at 115.7 billion USD. The sum of 50 billion USD, being deposited in Vneshekonombank (Development Bank) by the Central Bank, is sufficient for crediting companies on the 2008 repayments. At the same time, the credit conditions are (absolutely justly) characterized as extremely hard (some analysts even use the term temporary nationalization), because they envisage the pledging of export proceeds; the inclusion of the Banks representatives in the managerial bodies of a borrower; the requirement that any other loans and any sales of assets in excess of 10% of a companys value should be coordinated with the Bank; the requirement that credit security should be equal to export credit support, etc. By midOctober 2008, the Bank received applications for refinancing from Rosneft, VTB, Gazpromneft, TNK-BP, LUKoil, UC Rusal and the jointstock financial corporation Sistema. Judging by the minimum amount of refinancing set at 100 million USD (according to the Memorandum on the financial policy of the Bank), the case in point is indeed only the biggest companies and banks. Even the OJ-SC Gazprom, which has initially denied the existence of any problems with the corresponding repayments, is likely to join the ranks of applicants for state credits; but bearing in mind the exclusiveness of this company from the point of view of the Russian authorities, the scheme and the terms of its refinancing could differ from the standard ones.

In mid-October 2008 the authorities also made the decision to allocate financial means (from the National Welfare Fund) to purchasing shares in Russian companies (350 billion rubles in 2008-09). At present, there are no official data either on the already accomplished interventions, or on the amount of invested funds, or on the purchased blocks of shares, or on the beneficiaries. At any rate, it would be worthwhile to pay attention to such applied issues as the advisability of monopolization of practically all operations by Vneshekonombank (Development Bank), and the procedure for choosing operators (professional intermediaries) who would deal with the already implemented transactions, as well as with those to be tackled in the future, including the question of the terms of their commission. However, the issue concerning the transparent criteria of advisability of each of such transactions and the public control thereof is much more important all the same. In accordance with the RF Governments Decree of 15 October 2008, the RF Ministry of Finance should be vested with the right to invest up to 80% of the means of the National Welfare Fund in shares and bonds, including up to 50%28 in the shares listed at MICEX and RTS or included in the MSCI World Index and the FTSE All-World Index and in the funds carrying out the corresponding investments.

Judging by indirect information alone, such injection began only on 17 October 2008 with regard to shares in Gazprom, Rosneft and the Savings Bank. Except for repeating all the theoretical considerations concerning the low (almost zero) efficiency of using budget funds for stock market stabiliza Rossiiskii fondovyi rynok. Pervoe polugodie 2008 g. (The Russian stock market. The first half-year 2008).

NAUFOR (the National Association of Participants of the Stock Market), SKOLKOVO School of Management Community, 2008.

For more detailed reference including comprehensive schemes and diagrams of the state anti crisis injections, see the official websites of the leading news agencies and periodicals for October 2008 (for example, www.vedomosti.ru, www.kommersant.ru, www.expert.ru, etc).

Or between 45 and 50 billion USD at the mid-October 2008 size of the Fund.

tion in time of crisis29, all we can do for the time being is to register the prevalent estimation of experts pointing to the absence of a general strategy of interventions, to the lack of any experience of implementing anti-crisis measures, and to the divergence of stock market trends even with regard to the narrow circle of leading issuing companies. It seems that for the moment the case in point is represented by the following three possible directions: the selective resistance to margin calls; the acquisition of some or other assets; and the attempts at adjusting the market with respect to the individual issuers the State is interested in. In this connection, insider trading is quickly becoming an especially acute problem. Same can be said of the general policy concerning any type of financial abuses (in other words, the most trivial embezzlement of funds).

In any case, it is too early to put forth any detailed assessments of the ongoing events, mostly due to the absence of any critical mass of actually implemented transactions and the lack of public information at least on the volumes and the criteria of state interventions30. The most pessimistic scenarios, nevertheless, have the right to existence, at least on the strength of the general estimations of the institutional environment, the problems of whose functioning have become, in our opinion, one of the purely Russian factors of the crisis being experienced by Russias financial system31. Nevertheless, the conclusion that a new stage of the States property expansion has begun in Russia is absolutely correct (even with taking into account the objectively necessary anti-crisis component).

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