Alexei Vedev: Within the next few years the price of foreign loans to go down and to become an attractive factorНазад
Alexei Vedev: Within the next few years the price of foreign loans to go down and to become an attractive factor
Russia made no borrowings in the foreign markets during the last three years; it was paying off its foreign debt, moreover, even dealing in the markets of capital it partially repaid and partially redeemed its debts. Thus, it was unreasonable to make any new loans in the market. However, the situation can suddenly change and it seems to do this just now
A considerable inflow of currency during the last three years has established a favorable situation for step-by-step increase of credit ratings of the whole Russia and also of separate regions and companies. The increase of credit ratings stimulates the decline of interest rates of loans. Although Russia hasn"t achieved investment ratings yet, the price of loans is going down. That"s why this year and in 2004-2005 we can expect this tendency to go on and the price of loans to go down, and this is really attractive. However, we have a problem here connected with the financial balance. On the one hand we must make foreign debt payments and serving foreign debt costs a certain sum of money and on the other hand we have a surplus of financial resources which isn"t employed. The third point is that Russia can"t pay its foreign debt in full (taking in account the amount of funds it currently has). It can do this only in open financial market and this will cause price fluctuations. The issue is rather complicated but I should say that in our context we must be guided by the statement about the price we have to pay for Russia"s foreign debts and about the price of attracting new funds and accordingly benefits and losses from this.
There is a marked tendency of oil price decrease and on the other hand the Government understands that the source of state treasury replenishment will reduce, that"s why it"s going to borrow again. That is, the idea is to serve the debt in future with the improved state of the economy. Here we have the price of borrowed funds on the one hand and the price you are paying for your debt on the other hand. So, this is question of delta between the price of serving and the price of attracting.
Internal debt also has its price. This price is determined in accordance with standard interest rates, but if we speak in terms of foreign debt the dynamics of the real exchange rate should be considered as well. The price of our internal debt has fallen to extremely low interest rates. I mean that if this is 7% per annum in nominal value then taking into account that inflation is higher the real interest rates will be negative. Taking into consideration that real exchange rate of the ruble is getting stronger it is reasonable for monetary authorities to transform foreign debt into internal one. This will surely mean saving money. We have several interrelated processes: planned foreign borrowing, and macroeconomic situation which can make monetary authorities change the exchange rate policy in case foreign positive affect disappears and even becomes negative; so there won"t be any reason for spending reserves on the ruble support. And the third process is transforming foreign debts to internal ones.
We can make the following conclusion: there"s no need in foreign borrowings today.
In 2003 the volume of free cash is huge and at this background the deficit of financial instruments can be clearly seen. The volume of free cash significantly exceeds the volume of financial instruments, and this results in interest rates slump. Thus, in the current situation it will be unreasonable to float any foreign bonds or Eurobonds because there"s a great deal of money as it is. Most likely the situation will remain the same up to the end of 2003."
