Proceeding to the review of the situation in the monetary sphere, it is worth noting, that with the anticipated volume of capital inflow in 2008 (corporate and banking sectors debt is expected to be extended up to USD 545 billion), the Central Bank will probably actively use additional instruments of sterilization, rather than face the liquidity shortage problem (in financial system in general). According to our estimates, while federal budget expenditures are sustained at the level of 18.1 per cent of GDP, in order to maintain the annual growth rate of monetary supply (Ì2) at least within 32-33 per cent (versus 33.7 per cent in 2007), financial authorities will have to sterilize minimum RUR 200 billion, obtained from monetization of balance of payments surplus.
By 2012, the monetary supply growth rates will be declined to 15–16 per cent per annum, exceeding the inflation rates, which will enable to achieve the level of monetization at about 58-59 per cent of GDP. However, in 2009, due to fairly rapid reduction of the balance of payments surplus, in the background of sustained conservative fiscal policy (federal budget expenditures will not exceed 18.5 per cent of GDP), the problem of replenishment of the monetary supply with the help of refinancing instruments of the Bank of Russia becomes rather aggravated. According to our assessments, in order to maintain the real interest rates on credits to non-financial sector not in excess of 3-3.5 per cent per annum, what enables to keep up the investment growth rate, the RF Central Bank in 2012 will have to provide refinancing to the banking sector in the amount of minimum RUR 4 trillion (6.6 per cent of GDP).
According to our estimates, under this scenario, it is impossible to reduce inflation below 5.0 per cent in 2012. The total prices growth over the five years will reach at least 40 per cent.
Dynamics in Economic Development of Russia as per Forecast Models within 2008–Model I II III IV GDP in real terms (growth 33–35 27–28 5–6 1–within the period), % Investment index in capital assets (growth 85–90 62–67 –9–10 –11–within the period), % Inflation (2012), % 5,0–5,5 4,5–5,0 10–11 14–Balance of current account surplus (% of –4,4 –0,7 5,5 2,GDP, 2012) Balance of capital account surplus (% of 2,2 1,3 –4,6 –3,GDP, 2012) Nominal exchange rate RUR/USD (2012) 29,0–29,5 30 46–48 50–Real effective exchange rate, % (growth +30–32 +24–25 +4–5 –20–against July 1998), % Gold and foreign currency reserves 690–700 670–680 205–215 180-(2012), USD bln GDP monetization (2012), % 58–59 56–57 32–33 33–* The surplus of the current account balance, in the background of low oil prices, planned in this in this forecast model is based on the assumption, that the ruble devaluation, as well as the reduction of import for the purpose to equalize the RF balance of payments will already take place by 2012.
The surplus of the current account balance, in the background of low oil prices, planned in this in this forecast model is based on the assumption, that the ruble devaluation, as well as the reduction of import for the purpose to equalize the RF balance of payments will already take place by 2012.
With lower volume of external financing (model II), growth rate of investment in fixed assets and the RF GDP in real terms will be lower. However, the share of foreign debt in GDP will also not exceed 37.5 per cent of GDP. Our assessments demonstrate, that basing on the given assumptions of capital inflow to Russia, the refinancing volume to the banks, provided by the RF Central Bank as early as in 2008 should reach about RUR 800 billion. Otherwise, real interest rates on credits to non-financial sector can exceed 5 per cent per annum (currently they are practically negative), which means a sharp decline in the availability of investment resources in the economy. Nevertheless, the average annual growth rate of GDP in real terms will remain high enough, at least 4.5-5.0 per cent per annum, while inflation may be decreased to 4.5 per cent in annual terms by the end of 2012.
Thus, this forecast model, although presumes a slight decline in the growth of Russian economy in comparison with the first one, in our view does not bring any threat to the long-term continuous development and is quite favourable.
Comparison of the third and fourth forecast models, which, as a matter of fact, are options of crisis scenario, demonstrates that in the current context of increasing dependence of the GDP growth in real terms on investment dynamics in fixed capital, the restriction on external financing over 2-3 years (model III) can provoke the consequences, comparable with the situation of sharp and sustained decline in oil prices (model IV). In both cases, in 1-2 years after the beginning of negative developments (2010-2011), Russia will face the need to quite drastic devaluation of the national currency and equalization of the balance of payments by reducing the attractiveness of imports. However, at least for 2-3 years, the rate of growth in real economic indicators (GDP, investment, incomes) will be experiencing a serious decline, down to negative values.
The current stage of reforming the system of staffing of the RF military organization: a generalized military – economic appraisal V. Tsymbal One of the most important military – economic events of the year 2007 was the completion of the federal target program (FTP) “The transition of a number of formations and military units to being manned by servicemen enlisted for military service under contracts” for the years 2004 – 2007. However, the official estimates of the FTP’s results have not been made public as yet. At the same time, our analysis, based on indirect data, indicates that the main objectives of the FTP have not been achieved, despite the allocation of additional finances.
The issue of the FTP’s results is by no means being hushed up. However, what appears in the mass media is limited to contradictory statements of individual officials, while official documents - for example, the corresponding section of the RF Government’s Report on the results of its activity in 2007 25 - offer rather sketchy bits and pieces of information on the FTP, which are not compatible with the established procedure.
There was no possibility to give a full account of the FTP’s results in the IET annual survey for the year 2007, either. At the same time, an independent and detailed appraisal of these results would be very important for society, and not only the appraisal by itself, but an appraisal in conjunction with an analysis of the negative consequences which could surface in the nearest future.
Let us begin with stating that the completion, in 2007, of the afore – said FTP was not an isolated event, but yet another phase of the reform of the system of staffing of the RF military organization, which began more than 15 years ago, in November 1992. This statement has its proof in the following juridical circumstance. Both Decree of the RF Government of 30.11.1992, No 918, “On the measures concerning the stage – by – stage switchover to staffing the Armed Forces on a voluntary basis, by servicemen serving under contracts”, and the RF President’s Edict of 16.05.1996, No 722, which set the timeline for the completion of this switchover (then – by the spring 2000) are still with force (!). Although with force, these documents are much altered and truncated. In 2005, the first of them was amended only in one respect: the lump-sum allowance to the servicemen who have signed the contract should be paid not to all of them but only to those “who have passed the trial”. The second document was amended in the following way: the concrete timeline for the completion of the switchover was replaced with the formulation: “to carry out the switchover to filling the military positions which should be held by soldiers, sailors, sergeants, and petty officers, by citizens entering into military service under contracts, as proper conditions for this are created”. It was not explained what these conditions should be; this information is still missing. So, the completion of this reform can be The main results of the RF Government’s activity in the year 2007. The official web-site of the RF Government.
delayed from here to eternity. And the new FTP being planned for the years 2009 – 2010 with regard to the switchover to military service under contracts of all sergeants and all the ships’ crews of the Navy, is not considered to be the final one.
The achievement of the FTP’ objectives. Before the launching of the FTP, its socially significant objectives were most actively expressed by non-governmental organizations, such as the Committees of Soldiers’ Mothers, and by some political parties - for example, “Yabloko”, SPS, and later - by “The Russian Party of Life”. For instance, the letter to the RF President, with the corresponding recommendations prepared by the IET, contained the following passage: “The essence of our proposals with regard to reforming the system of conscription is close, by its contents, to what has already been achieved in the field of taxation. In substance, we are suggesting that a type of tax liability, heavy, unequally distributed, and extremely unpopular in society (two-year military service for the poor) should be replaced with a low and equally distributed (six-month service for an absolute majority of citizens liable for call-up)”. It was suggested to establish that the purpose of such service should be limited to training the required number of servicemen in the basics of the necessary military occupation specialties, so as to prepare them for the subsequent entry into military service under contracts and / or for being transferred to the militarily-trained mobilization resource (or reserve).
On the side of the military organization of the State (MOS), the objectives of military reforms were formulated by the Security Council and the “power” structures. Naturally, priority was given to the combat efficiency of the troops.
The 2002 Message of the RF President contained the following compromise judgment: “One of the unquestionable priorities is the continuation of military reform and the switchover to a professional army, whereas the term of service under conscription should be reduced. Reform is necessary for society, but, first of all, for the army itself… We will carry out this work step by step, with taking into account both the financial capabilities of this country and the interests of the national security of the State. In the course of the army of a new type, mobile and compact, being built, it would be necessary to create adequate social conditions for the servicemen and their families”. In August 2002, the Security Council prepared, and the RF President confirmed “The Fundamental Principles of RF State Policy in the Sphere of Military Construction for the Period Until 2010”. This document stipulated that in the year 2003 a special FTP should be mapped up with regard to the switchover to the new system of staffing, beginning with the switchover of military units of permanent readiness and on high alert, whereas the draft was to be preserved, although the term of compulsory military service was to be limited to the period of up to one year and for one purpose only – to train the necessary mobilization reserve. In fact, this corresponded to the IET’s proposal, although the term of service was somewhat longer, in excess of what was necessary for being trained in a military specialty.
However, when formulating the two main objectives of the FTP, its certificate takes into account only the interests of the MOS:
- “to secure the switchover to filling the military positions, which should be held by soldiers, sailors, sergeants, and petty officers - by servicemen enlisted for military service under contracts, - to improve the combat efficiency of the military formations and the units of permanent readiness of the RF Armed Forces, and of the military units of the frontier and internal-service troops of the RF Ministry of Internal Affairs”.
In his interview to the newspaper “Krasnaya Zvezda” [ “The Red Star” ], RF Minister of Defense S. B.
Ivanov underlined the exclusively military character of the FTP in the following words: “A partial transition of the Armed Forces to a contractual basis is not a political declaration and is not the goal of development of Russia’s Armed Forces. It is one of the avenues to increasing the combat efficiency of Russia’s Armed Forces”. However, it should be noted that the military units on continuous alert were excluded, without any explanation, from the list of those whose combat efficiency is planned to be increased my means of the FTP.
What can be said with regard to the achievement of the FTP’s afore–said objectives now, when the program is completed Both objectives formulated in the FTP have not been achieved in full. The quantitative aspect of this is illustrated below, while the qualitative one is characterized by the fact that not only the initially approved number of positions to be held by non-commissioned officers and other ranks, but even the adjusted and considerably reduced number of them remains unfilled.
The objective of increasing combat efficiency has been achieved only fragmentarily. Thus, in the Frontier Service of the FSB, the increase was beyond all expectations because of the complete discontinuation of the draft and due to a complex of measures undertaken on the frontiers of the RF, which made it possible to reduce the overall number of border guards. The combat efficiency of internal – service troops increased to a lesser extent. On the other hand, the situation with the RF Armed Forces is complicated and confused. Most successfully the FTP was implemented in the units stationed in the North Caucasian Military District, where their manning and provision with amenities were directly supervised by the RF President. It is equally praiseworthy that the personnel of the units on continuous alert was not completely forgotten, after all, and that, although not mentioned in the FTP, submarine crews of the Navy were also made to serve under contracts. But the number of these crewmen is relatively small. As regards the majority of military units of the RF Armed Forces, and not only those of them that are included in the list of units of permanent readiness, one cannot but note that the number of contractees in many of them has actually dropped, and that the level of their personnel’s professionalism has declined, which could result in a decline in the combat efficiency of the RF Armed Forces, especially after the year 2008.