"Simplicity is worse than theft"
The next increase in the key interest rate on loans issued by the Bank of Russia in order to refinance commercial banks made the loan completely inaccessible to most enterprises in the real sector of the economy. With an average profitability of the manufacturing industry in 7,5-8%, a loan issued at 10% and higher rates cannot be used by most enterprises either for investment or for replenishing working capital. With the exception of a number of branches of the oil and gas and chemical-metallurgical sectors, the real economy is cut off from this by credit resources issued by the state.Prior to this, due to a boom in consumer lending that drove millions of citizens into the 10 trillion-dollar debt trap, the real economy was deprived of the savings of the population, which turned into a net debtor. In addition to this, the Government has withdrawn pension savings from it. NATO sanctions deprive the economy of the main part of the external loan. To finance working capital and investments, most enterprises have only their own funds, which are clearly not enough to ensure not only expanded, but simple reproduction. The volume of enterprises' profits this year (taking into account the fall in prices for export goods) will not exceed 10% of GDP with the required investment rate of 25-30% of GDP. There is nothing surprising in the fact that due to this kind of decisions against the background of economic recovery in almost all countries of the world this year, Russia is experiencing an unexpected decline in investment and production.
According to the Central Bank’s explanation, the decision to raise the interest rate was made by him due to external circumstances: “In September-October, external conditions changed significantly: oil prices dropped significantly, while there was a tightening of sanctions imposed by individual countries on a number of large Russian companies. Under these conditions, the ruble weakened, which, along with the restrictions on imports of certain food products introduced in August, led to a further acceleration of consumer price growth ”(On the key rate of the Bank of Russia, October 31 2014). In support of the previous decision to raise interest rates, the Central Bank stated that “inflationary risks have increased, including, inter alia, increased geopolitical tensions and its possible impact on the dynamics of the national currency rate, as well as the changes in tax and tariff policies being discussed” ( key rate of the Bank of Russia, 25 July 2014). Earlier, the decision to raise the interest rate of the Central Bank explained the “stronger than expected effect of exchange rate dynamics on consumer prices, rising inflation expectations, and the unfavorable market conditions of certain goods (On the key rate of the Bank of Russia, 25 April 2014).
This argument does not hold water.
Any entrepreneur who deals with the real economy, and not with utopian models of market equilibrium, will say that a rise in interest rates leads to an increase in the cost of credit. This leads to an increase in the costs of borrowing enterprises and, accordingly, to an increase in prices for their products. Increasing the percentage above the rate of return on assets does not make sense for the financing of investments, and in excess of the profitability of the products produced - for replenishing working capital. The result is a reduction in production, causing an increase in costs per unit of output and a further increase in its price. The impossibility of lending investments prevents enterprises from reducing costs by increasing the scale and technological improvement of production, which closes the main ways to reduce prices.
All of the above has been proven theoretically many times and confirmed by practical experience. The increase in interest rates and the concomitant contraction of the money supply always in all countries led to the same consequences - falling investments and production on the one hand and rising costs on the other, which resulted in the collapse of many enterprises that were unable to further refinance the production process. And today, just like in the 90s, this policy drives the economy into a stagflational trap, depriving it of development opportunities.
Apparently, the leaders of the Central Bank are guided by fantasies drawn from textbooks on macroeconomics for elementary students. In some of them, in order to facilitate students' perception of market mechanisms, the latter are simplified to primitive mathematical equilibrium models, almost a century ago introduced to economics from classical mechanics. In these mechanistic models, the economy is represented as a set of profit-oriented economic agents with perfect knowledge, working under conditions of perfect competition and instant availability of any resources. In them, an increase in the money supply, like any commodity, entails a decrease in their price, which is equivalent to an increase in inflation. Conversely, an increase in the price of money (interest rate) entails a decrease in their supply and a fall in inflation. On this basis, in the favorite monetarist identity of Fisher postulated a directly proportional relationship between the growth of money supply and prices. And, although it is not statistically confirmed, the advocates of this theory stubbornly profess the dogma of a direct linear relationship between the growth of the money supply and the level of inflation, as well as, accordingly, the inverse relationship between the latter and the interest rate. Because of its simplicity, it seems obvious to laymans, which makes it easily imposed on public opinion. It is the same as treating all the diseases with bloodletting, which was practiced by medieval doctors in respect of gullible patients.
In reality, none of the assumptions accepted as axioms in equilibrium models is observed. Being guided by them in economic policy is the same as building socialism according to the Communist Manifesto of Marx and Engels. Without taking into account the diversity of people and the institutions they create, without distinguishing between enterprises, industries and technologies, without development mechanisms. This economic "theory" degenerates into scholasticism, unfit for practical use. Therefore, in developed countries, none of the managers are not guided by the theory of equilibrium, deriving profit from non-equilibrium situations and developing the economy by complicating it. The mechanistic picture of the equilibrium economy remains for dilettantes and is used to convince them of the uselessness of state intervention in the economy. With particular perseverance, she hammered into the public consciousness of developing countries in order to deprive them of the ability to creatively develop their institutions, which are replaced by the “free play” of market forces governed by the monopolies of developed capitalist countries. Unfortunately, our monetary authorities willingly “lead” to this mythology, not understanding the elementary meaning of the function of credit in the modern economy. This meaning is necessary to clarify.
The very emergence of modern capitalism is associated with the invention of state money for the formation of an unlimited source of credit through the issuance of the national currency by a special institution, the Central Bank. This issue is essentially a mechanism for advancing economic growth, the use of which is possible both in private and in the public interest. In the first case, the model of which is the US Federal Reserve, the issue of money is subject to the interests of the owners of the Central Bank, who receive enormous opportunities to manipulate the market. As the experience of financial crises shows, these manipulations are performed by them in order to appropriate not only share premium, but also national wealth. By lowering the interest rate and expanding the money supply, the Central Bank stimulates the growth of production and investment. Raising it, it provokes bankruptcies of cheap loans of enterprises, whose assets go to bankers close to the Central Bank, with unrestricted access to the loans it creates.
In the case when the Central Bank is a state monopoly, as is the case in most countries, its right to issue money can be used to develop the national economy, ensuring its growth with the necessary amount of credit. This happens in Japan, China, India, Brazil, the euro area, Iran, and Turkey. Or it may not be used if the country is not independent and transfers its Central Bank to external management. The latter is characteristic of many former colonies, the elite of which is closely linked by their interests with the metropolises, who still control their monetary policy.
In the post-war period, many of the developing countries fell into a debt trap, trying to finance their development with foreign loans. Under the threat of bankruptcy, they were forced to cede control over their monetary policies to creditors, in whose capacity as the collective spokesman for whose interests the IMF was appointed. These interests boiled down mainly to the opening of national economies to the free movement of foreign capital, the requirements of which were subject to monetary policy. The latter include the free conversion of the national currency, the removal of any restrictions on foreign investment and the export of capital, the linking of the issue of the national currency to the increase in foreign exchange reserves formed in the currencies of the creditor countries. Thus, the economy of the debtor countries was subordinated to the interests of the capital of the creditor countries, the absolute leader of which was the USA, which imposed the use of the dollar as a world currency on the capitalist world.
Russia was drawn into the same dependence, taking on the external obligations of the USSR and automatically finding itself in a debt trap. And, although the Russian state has already returned the debts, the Bank of Russia is still focused on servicing the interests of foreign capital. For the sake of this, the monetary authorities abandoned foreign exchange control, tied the issue of rubles to an increase in foreign exchange reserves, and passed the assessment of credit risks to US rating agencies. This policy is justified by the goals of attracting foreign investment, which are considered as the leading source of economic growth.
In fact, the calculation of the inflow of foreign investment turned into a huge capital outflow. Russia has become one of the major donors to the global financial system, almost without interest lending to the United States and other countries issuing reserve currencies in the amount of about $ 100 billion a year. The consequence of the monetary policy pursued in the interests of foreign capital was the degradation of the economy, which preserved mainly raw materials production with low value added, supplied to the world market in dollars and euros. At the same time, foreign capital derives huge benefits from this policy, arbitrarily inflating and bringing down the national financial market.
It is not difficult to calculate that on 1 the dollar invested in speculation with vouchers and securities of privatized enterprises in 1993-1996 years, foreign “investors” received up to 5 dollars in profits. The expansion of the speculative field at the expense of government short-term obligations in 1996-1998 allowed this profit to double. By taking her out of Russia and bringing down the financial market, foreign speculators brought the country to bankruptcy, which resulted in a 10-fold impairment of assets. Returning and buying them for nothing after a default, speculators began a new pumping of the financial market, doubling their capital by the 2007 year and taking it out at the moment the global financial crisis began.
Thus, the subordination of monetary policy to the interests of foreign capital made it possible for international speculators to get an invested dollar up to 1 dollars in profits during a twenty-year rally in the Russian financial market on 200. In large part they are taken out of the country. These profits were paid by the Russian population and the state. The share of direct investments at the expense of which production or real assets were created in this financial flow was negligible.
Of course, the Russian partners of foreign speculators did not remain in the loser. Many of them became the pioneers of the offshore Russian economy, creating a class of offshore oligarchy. The interim commission of the Federation Council to investigate the causes, circumstances and consequences of 1998’s default revealed direct collusion with representatives of foreign capital of a number of senior officials of the Bank and the Government of Russia. Some of them still occupy influential positions in state structures contrary to the recommendations of the Federation Council "... to take measures to ensure that those who participated in the preparation and decision-making of 17 August could no longer hold any posts in public service or in organizations in which there is a share of state ownership »1.
In the course of the financial crisis of 2008, the Russian oligarchy, which learned the art of financial speculation, began to independently manipulate the issue of money. Having paid off foreign debts, the Russian monetary authorities no longer needed to coordinate their policies with the IMF and the US treasury behind it. Under pressure from the crisis of outflow of foreign capital, they began to issue rubles independently, without tying it more to foreign exchange reserves. However, it was aimed not at stabilizing production that collapsed during the crisis in the sectors of the real sector from 5 to 40%, but at the enrichment of privileged commercial banks. Having directed the bulk of the unsecured cheap loans to the foreign exchange market, they extracted about 300 billion rubles. profits on speculation against the ruble due to the depreciation of the savings of the population.
And today, the bulk of loans issued by the Bank of Russia to refinance commercial banks are used by the latter for the purposes of currency and financial speculation, artificially heated by the policies of the Central Bank itself. After raising the interest rate and launching the mechanism of a smooth depreciation of the ruble, the Bank of Russia, on the one hand, blocks the inflow of loans into the real sector, and, on the other hand, it creates opportunities to extract super profits on speculation against the ruble. Thus, it creates a speculative funnel, in which the savings of the population turn into super-profits of currency speculators. The assets of corporations are dragged into the same funnel, and after their inability to pay off rising loans they will be transferred to the same monetary and financial speculators who are rocking the market from offshore companies.
Thus, the “holy simplicity” of central bankers, who unconditionally believe in the truth of the mechanistic picture of the world of economic equilibrium models, is not at all harmless and is subordinated to the interests of transnational capital, of which Russian offshore oligarchy is part. It is possible that the pious belief in the dogma of the Washington Consensus, they do not know what they are doing. But their activity is highly appreciated by teachers recognized by the American elite. Soon, the current leaders of our monetary authorities will be honored as the “best in the world” finance ministers and chairmen of central banks, like their predecessors in previous years. Best in the sense of creating ideal opportunities for the legal enrichment of the oligarchic International at the expense of the national wealth of our country and its citizens.
The current increase in crisis trends is partially reminiscent of the situation at the end of 1997. As then, the government decided to sharply reduce export duties, depriving the budget of a significant portion of revenues. The outflow of foreign capital has begun. As then, instead of introducing restrictions on the export of capital, interest rates were raised and the capital market was stimulated. As a result, as then, the crediting of the real sector lost its meaning and investment and production began to fall.
The significant difference lies in the budget surplus and the absence of public debt (which is compensated by the presence of a similar corporate debt by weight), in refusing to maintain a stable ruble exchange rate and in the presence of large foreign exchange reserves. Default does not threaten the state, which cannot be said about corporate borrowers.
Having today a much greater margin of safety than in the 1997 year, the monetary authorities themselves destroy it, provoking a fall in business activity and destabilizing the ruble exchange rate. But this does not prevent a crisis, but only stretches it in time to the delight of the offshore oligarchy, which can plan currency speculation without much risk. The logical result of this policy is a drop in production and investment, a decline in incomes and a bankruptcy chain of industrial corporations, as well as the next depreciation of citizens' savings.
The policy of the monetary authorities has already led against stagnation of the global economy, which is manifested in the destabilization of the ruble exchange rate and rising inflation on the one hand, and a fall in investment and economic activity on the other. The "trigger" of the crisis was the introduction of economic sanctions. On the one hand, it resulted in the refusal of Western lenders to provide new loans to Russian corporations and curtail foreign investment. On the other hand, it provoked a strengthening of the already transcendent capital outflow. Its volume in the current year is expected to be not lower than 100 billion dollars. Including, at least a third is an illegal outflow (capital outflow), committed with a withdrawal of income from taxation with damage to the state budget to a trillion rubles annually.
Currently, more than half of the monetary base is formed for external sources of credit, and through offshore companies 30-40% of non-state investments are made. Russia's total external debt reached 650 billion dollars (74% of debts are denominated in dollars and euros), exceeding the amount of foreign exchange reserves, which is 420 billion dollars. The bulk of external debt falls on corporations and banks, including more than 60% - on state-owned. At the same time, the overwhelming majority of foreign loans came from countries under the jurisdiction of NATO member states. The sanctions imposed by them entail withdrawal from Russia of about 11 trillion. rub. until the end of next year. The tightening of sanctions could lead to the blocking of Russian capital in offshore zones, through which more than 50 billion dollars of investments go annually.
Due to the destabilization of the ruble exchange rate, there is a dollarization of citizens' savings, which is one of the forms of capital withdrawal, which has already reached more than $ 30 via this channel.
Despite the US-launched war against Russia, the Central Bank continues to hold on to the dollar as a first-class currency, using it both as a measure of value, as a means of capital accumulation, and as an exchange tool. The policy pursued by the Central Bank implies the use of the dollar as a parallel, if not the main currency in relation to which the ruble is quoted, in which currency reserves, foreign trade operations, collateral and loans are denominated. This policy is reminiscent of the monetary system introduced by the Third Reich in the occupied 1941-44. Soviet territory.
The Central Bank does not take measures either to stop capital outflows or to replace exhausted external sources of credit with internal ones. Despite the financial war launched by the US leadership against Russia, it is still guided by the dogmas of the Washington Consensus, which subordinate macroeconomic policies to the interests of foreign capital. This multiplies the negative impact of sanctions, which could be easily stopped by simple exchange control measures combined with the expansion of domestic sources of credit.
That is exactly what V.V. Gerashchenko to get out of the 1998 crisis of the year. Having fixed the currency position of commercial banks and having refused to raise the interest rate imposed by the IMF, the Bank of Russia increased the money supply. Contrary to the opinion of the current leaders of the Central Bank, this led not to an increase, but to a rapid decrease in inflation simultaneously with a sharp rise in production and stabilization of the ruble exchange rate. Today, the Central Bank acts the other way, with the corresponding reverse effects: a decline in production, a fall in the ruble exchange rate and an increase in inflation.
The Bank of Russia loans granted to the banking system do not compensate not only for the withdrawal of capital by Western creditors, but even for the withdrawal of money by the Government to the stabilization funds. As a result, the monetary base is compressed, which leads to a reduction in credit, a fall in investment and production. At the same time, the Government withdraws money from the production sector, withdrawing more than 7 trillion into reserve funds. rubles, and the Central Bank issued loans to banks on 5 trillion. rubles, which are immediately sent to them for monetary and financial speculation. Thus, the monetary authorities simply transfer money from the production sector to the financial sector, while reducing their volume. By the end of next year, if the policy of the Central Bank does not change, the termination of the external loan will result in a sharp reduction in the monetary base by 15-20%, which will cause a spasmodic contraction of the money supply and lead to a fall in investment by more than 5% and production by 3-4% . The contraction of the money supply threatens the collapse of the financial market, similar to what happened in 2007-2008. The outflow of capital provokes defaults of many borrowers who may become avalanche-like.
The policy of raising the refinancing rate pursued by the Central Bank entails a rise in the cost of the loan, reinforces the tendency to squeeze the money supply and exacerbates the money supply deficit with all the above mentioned negative consequences. At the same time, inflation does not decrease as a result of the continued effect of its non-monetary factors, as well as the increase in costs due to the rise in the cost of credit, the reduction of production and the depreciation of the ruble. The latter, due to the unavailability of credit, does not give a positive effect on the expansion of exports and import substitution. Due to the deterioration of the conditions for the reproduction of capital, its flight continues, despite the increase in interest rates. The economy is being artificially dragged into the funnel of declining supply and demand, falling incomes and investments. Attempts to keep budget revenues by increasing tax pressures aggravate capital flight and falling business activity.
The economy is being dragged into a stagflational trap solely because of the ongoing monetary and credit capacity, in which there is free production capacity, which in industries accounts for 30-80%, underemployment, savings in excess of investments, and surplus of raw materials. The economy operates on nothing more than 2 \ 3 of its potential power, while continuing to be a donor to the global financial system.
To get out of the stagflational trap, you need to stop spiraling “capital flight - reducing money supply - falling demand and credit crunch - increasing costs - rising inflation, falling production and investment”. To do this, it is necessary to take simultaneous actions to stop capital outflows, macroeconomic stabilization, deoffshorization of the economy, creation of mechanisms for crediting economic growth from domestic sources.
To stop the export of capital, you first need to burden cross-border financial transactions so that their illegal component has lost its meaning. Secondly, to cut off speculative operations aimed at making profit due to destabilization of the currency and financial market. Third, cut off the channels of internal capital flight to accounts in foreign currency.
The first task can be solved by imposing a tax on capital outflow at the rate of VAT on non-cash cross-border transactions in foreign currency. In the case of confirmation of the legality of these operations (delivery of imported goods, provision of services, confirmation of payment of interest or loan repayment, dividends and other legal income on invested capital), the VAT paid will be refunded. Thus, only the illegal export of capital, as a rule, with tax evasion, will be subject to taxation. As long as tax is imposed, the Central Bank may require money to be reserved at the VAT rate for all suspicious cross-border transactions for a period of one year or until the moment they are confirmed as legitimate.
In addition, exporters should refund VAT only after export earnings have been received. It is necessary to introduce fines for overdue receivables for import contracts, non-receipt of export earnings, as well as for other types of illegal export of capital in the amount of its value. It is necessary to stop the inclusion in the non-operating expenses (reducing taxable income) of bad debts of non-residents to Russian enterprises. It is also necessary to organize the filing of claims against the managers for the compensation of damage to the enterprise and the state in the event of such debts being identified.
To curb illegal operations for the export of capital, accompanied by tax evasion, it is necessary to create a unified information system of currency and tax control, including electronic declaration of transaction passports with their transfer to the databases of all currency and tax control bodies, the introduction of liability standards for managers of enterprises that allow for the accumulation of overdue accounts receivable for export-import operations.
In relation to the export of capital in cash, a reasonable barrier should be established, the excess of which should be interpreted as a transaction on the export of capital. For example, 1 mln. Rub., Which is obviously higher than the annual salary of guest workers, expenses for tourist purposes and other current operations of citizens. And the export of money in cash foreign currency in excess of the equivalent of more than 1 million rubles. - levy a tax on capital flight.
It is necessary to achieve transparency of cross-border operations for tax and currency control purposes. Following the example of Americans, it is possible to conclude agreements on the exchange of tax information with foreign countries and order foreign banks to keep records and report all transactions with the funds of Russian banks and companies around the world. At the same time, introduce the responsibility of Russian beneficiaries for the declaration and taxation of their foreign accounts, assets and operations in accordance with Russian legislation.
In order to separate legal and illegal export of capital, it is advisable to introduce the Central Bank licensing cross-border operations for the export of capital in foreign currency. You can also enter advance advance notice of capital outflows, raise reserve requirements for Russian banks on foreign currency transactions, and set restrictions on increasing the currency position of commercial banks.
To avoid excessive losses, restrictions should be imposed on the volume of off-balance sheet foreign assets and foreign securities, including government bonds of the United States and other foreign countries with a high budget deficit or government debt.
In order to stop the internal outflow of capital, it is necessary to prohibit the opening of deposit accounts in foreign currency, as well as the accumulation of money in previously opened accounts. Restrict the operation of the system of guaranteeing bank deposits of citizens only to deposits in rubles. These measures should be taken at least because in the conditions of the financial war being waged against Russia, the state cannot guarantee the preservation of values denominated in foreign currency. At any time, they may be impaired or frozen due to hostile actions or for other reasons outside of Russian influence.
Currency control should apply not only to banking services, but also to all financial transactions, including insurance. The latter are widely used for capital outflows and tax evasion. At the very least, it is necessary to terminate the conclusion of insurance contracts in foreign currency. In addition, the City of London’s artificial monopoly on reinsurance operations, through which substantial revenues are taken out, should be abolished. Experience shows that in the case of truly force majeure circumstances, it is impossible to count on the fulfillment of insurance obligations by foreign companies. A much more effective and reliable solution is to establish a state reinsurance monopoly, which can be given, for example, by the Export Insurance Agency of Russia.
In general, in conditions of financial war, operations in rubles should be considered by the regulator as more reliable than operations in foreign currency. At the same time, transactions with currencies of countries that have imposed economic sanctions against Russia should be considered the most risky. On the basis of this, the Central Bank should establish increased standards for the reservation and risk assessment of banking operations in foreign currency compared with operations in rubles.
In order to de-dollarize the economy and increase the stability of the country's monetary and financial system against speculative attacks, it is advisable to introduce an 5% tax on the purchase of foreign currency or foreign-denominated securities.
The above measures for regulating cross-border transactions should apply only to operations in foreign currency. Before the financial crisis of 2007, their absence did not have a significant effect on macroeconomic stability due to the rapid growth of the positive trade balance. It exceeded the negative balance of non-trading operations. And, although the country's financial system suffered huge losses, foreign exchange reserves grew, which ensured the stability of the ruble. But with the growth of capital outflow and the growth of foreign debt of corporations and banks, there is a threat of destabilization of the financial and monetary system, which manifested itself in the form of a one and a half ruble exchange rate and a threefold collapse of the stock market with a loss of $ 200-2007. Today the situation can be repeated on a large scale.
Unlike the export of capital in foreign currency, its export in rubles does not create direct threats to macroeconomic destabilization, provided that the listed currency control measures are observed. Of course, the collapse of rubles accumulated abroad on the domestic market can cause its uncontrolled growth and the strengthening of the national currency above the equilibrium level. However, the application of the above measures to discourage speculation against the ruble creates a fairly high barrier that can hardly be overcome for speculators if there are sufficient foreign exchange reserves. At the same time, the export of rubles means that share premium (seigniorage) remains in the Russian financial system and can be used to increase investment, import goods and services, and increase reserves. Within certain limits, it is beneficial for the country, expanding the capabilities of the financial system and reducing foreign economic transaction costs, increasing the competitive advantages of the national economy. Giving the ruble functions of a reserve currency is also a prerequisite for ensuring the sustainability of the Eurasian integration process. Therefore, one should refrain from imposing restrictions on cross-border transactions in rubles, create conditions for recognizing the ruble as reserve currency by the monetary authorities of other countries, and also encourage import and export for rubles.
In addition, in order to expand the demand for rubles, in order to impart greater stability to the domestic monetary and financial system, it is advisable to stimulate the transition in mutual settlements in the CIS to rubles, in settlements with the EU - into rubles and euros, with China - into rubles and yuan. It makes sense to recommend to business entities to switch to settlements in rubles for exported and imported goods and services. At the same time, it is necessary to provide for the allocation of related ruble credits to the states-importers of Russian products to maintain trade, and to use credit and currency SWAPs.
The system of servicing settlements in national currencies between enterprises of the CIS countries through the Interstate Bank of the CIS and with other countries using the international financial organizations controlled by Russia (IBEC, IIB, EDB, etc.) should be radically expanded. It is advisable to create a payment and settlement system in the national currencies of the EurAsEC member states, to develop and implement its own independent international payment system with the banks of Russia and the states members of the Customs Union and the CIS, as well as China, Iran, India and Syria. Venezuela and other traditional partners.
The measures listed above will create the necessary conditions for the stability of the ruble exchange rate and the financial market against external threats. However, there remain internal threats associated with the overflow of the money supply to the foreign exchange market. Although this threat was fully manifested in the 90s, when the rubles issued for lending to agriculture and other sectors of the real sector flowed into the foreign exchange market, as well as in the 2008, when 2 trillions of rubles issued for anti-crisis purposes fell on the foreign exchange market, once again depreciating savings, the monetary authorities continue to ignore it. And this is despite the fact that simultaneously with the expansion of the refinancing of commercial banks by the central banks, capital outflow is growing, which suggests that the bulk of the loans received from the central banks are used by commercial banks to speculate against the ruble in the foreign exchange market.
To stabilize the foreign exchange and financial markets, it is necessary to stop pumping the financial and foreign exchange market through the issue of money. This does not mean that refinancing of commercial banks by the Bank of Russia should be stopped. On the contrary, to overcome the recession and ensure the growth of the economy, this refinancing should be expanded. But to spend it wisely, imposing obligations on banks resorting to it. In particular, as a condition for obtaining a loan from the Bank of Russia, commercial banks can be offered to undertake obligations for the targeted use of the received credit resources, excluding their sending for speculative purposes. To control the fulfillment of this obligation, it is possible to suggest fixing the currency position of commercial banks, using special accounts, limiting bank margins, and applying project financing instruments.
For banks that agree to control the use of loans by the Central Bank, the latter could significantly expand and extend the refinancing operations many times over. And to do them not so much through repos, as on the security of the rights of claims (bills) of final borrowers, the circle of which should be limited to manufacturing enterprises. The latter should also be monitored by creditor banks for the purpose of using the loans provided solely to replenish working capital or investments in fixed capital. Considering that any enterprise can conduct a wide range of financial transactions, including speculative ones, including for the purpose of exporting capital, it is advisable to extend to all legal entities the standards for the maximum allowable ratio of payables and receivables, to limit the leverage of financial leverage to no more than double.
The mechanism of refinancing commercial banks should be diverse enough to meet the objective needs for a loan. For the purpose of lending to industrial enterprises, refinancing should be provided at a rate not higher than 4% with a limitation of the bank margin of 1% so that the manufacturing enterprise could attract a loan at a rate not exceeding its profitability. For other purposes - at rates prevailing in the financial market.
The measures listed above relate to control over the supply of rubles and are designed to limit the demand for foreign currency solely for the purpose of paying for imported goods and services, interest on foreign loans and other legal transactions. Obviously, for a stable ruble exchange rate, we need measures to ensure a stable supply of currency in sufficient volumes. In particular, it is advisable to restore the compulsory sale of foreign exchange earnings by exporters.
After the adoption of these measures to block the mechanisms for the promotion of speculative operations, the ruble exchange rate may be brought under control. To stop the speculative rush on the foreign exchange market, you can temporarily fix the exchange rate of the ruble at a level below the market. Subsequently, it will be unexpectedly adjusted for market participants depending on the state of the balance of payments in a targeted manner, based on optimizing the balance between the need for imports and the need to maintain the price competitiveness of domestic goods. International experience convincingly shows that, for the purposes of stabilization, a discrete change in the exchange rate of the national currency is better than a floating one, since it does not allow a speculative vortex to accelerate.
The implementation of the above measures for macroeconomic stabilization creates conditions for solving the problem of replacing external sources of credit with domestic sources without the risk of boosting inflation.
To prevent the bankruptcy of backbone enterprises, it is necessary to replace foreign loans of Russian corporations with loans of Russian banks. To do this, the Central Bank must conduct a targeted issue of credit resources with the provision of their enterprises on the same conditions as external lenders. Given the scale of this task (the volume of loans due for repayment before the end of next year is estimated at 180 billion dollars), it should be solved exclusively through state-controlled credit institutions. Their managers must be personally accountable for the targeted use of loans allocated to pay off the obligations of specific corporations to external creditors.
In order to prevent defaults of commercial banks on external liabilities, they should be subjected to stress testing with the release of the Central Bank, if necessary, stabilization loans on terms similar to foreign loans.
A special problem is the replacement of foreign loans of Russian enterprises received from European development institutions and used to finance the supply of equipment. In particular, in order to prevent the stopping of leasing of equipment financed from external sources, it is necessary to carry out a targeted issue of credit resources for funding development institutions under similar conditions using allocated funds for the same purposes. In each case, it is necessary to simultaneously consider the possibility of replacing foreign equipment with domestic counterparts. Even if they are more expensive and inferior in quality, in the end, it may be more profitable, as it reduces risks, expands the revenue base and opens the way to modernization and growth. You should also stop using the credit resources of state development institutions for leasing foreign equipment.
Deoffshorization of the economy should begin with identifying those activities that are most vulnerable to corruption abuses committed using offshore companies. To do this, it makes sense to introduce the concept of a “national company” legally - registered in Russia and not affiliated with foreign persons and jurisdictions. Only such campaigns should be given access to subsoil, state subsidies, to strategically important activities for the state.
It should oblige the ultimate owners of shares of Russian strategic enterprises to register their ownership rights in Russian registrars, coming out of the offshore shadow.
It has long been said about the need to follow the example of developed countries and conclude agreements on the exchange of tax information with offshore companies, to denounce existing agreements with them to avoid double taxation, including Cyprus and Luxembourg, which are transit offshore companies. At the same time, it is necessary to determine a single list of offshore companies, including those located inside onshores. It is legal to prohibit the transfer of assets to offshore jurisdictions that will avoid entering into such agreements.
In addition, it is necessary to introduce requirements for offshore companies owned by Russian residents to comply with Russian legislation to provide information on company members, and to disclose tax information for tax purposes in Russia of all revenues received from Russian sources under the threat of establishing 30% - tax on all non-cooperative transactions.
The implementation of the above measures will create the necessary conditions for the expansion of credit without the risk of overflow of money emitted and returned from offshore to the foreign exchange and financial market for speculative purposes. After their adoption, there is the possibility of non-inflationary expansion of the money supply and the remonetisation of the economy in order to increase investment and business activity.
The current decline in production is mainly caused by a contraction of the money supply, deterioration of credit conditions, destabilization of the currency and financial market, which resulted in capital flight and a fall in investment activity. To stop a downturn in business activity, it is necessary to give enterprises the opportunity to increase working capital in order to optimally utilize existing production capacity.
It is necessary, as justified above, to create a channel for unlimited refinancing of commercial banks by the Central Bank on the security of requirements for manufacturing enterprises for loans already issued at a rate not higher than the average profitability of the manufacturing industry with the obligatory condition for providing the received credit resources exclusively to manufacturing enterprises with a limited margin of 1%. As a result, the credit market is transformed from a buyer's market, where banks enjoy the monopoly advantage, and borrowing enterprises are forced to take loans on enslaving conditions, into a seller's market, in which banks will have to compete with each other for customers. Thus, access of solvent manufacturing enterprises to credit resources will open on the same conditions as their competitors in the West and in the East.
Solving the problem of financing working capital will ensure the cessation of the decline in production and its recovery growth in the existing production facilities. Due to this, it will be possible to increase the output of the manufacturing industry, construction and agriculture by 10-15% within two years.
If you take additional measures to import substitution, you can get as much again. To this end, it is necessary to create a mechanism for targeted crediting of projects for the expansion of existing and creation of new productions on the existing technological base. This requires the active work of the relevant industries and departments in the preparation and evaluation of proposed import substitution projects. Projects selected as promising should receive guarantees from the government or subjects of the federation to attract loans from development institutions and commercial banks and then refinance them by the Bank of Russia at the 2% rate while limiting the bank margin to 1%.
Recovery growth and import substitution will ensure economic growth in the coming 3-4 of the year. In order to enter the path of sustainable growth, long-term investments in the modernization of existing production facilities are needed in the future. To do this, it is necessary to create a channel of refinancing by the Bank of Russia for commercial banks secured by bonds and shares of backbone enterprises at a rate not higher than the average return on manufacturing assets with the establishment of the responsibility of commercial banks for the targeted use of received credit resources. Here it is necessary to widely apply the principles of project financing.
To reach the trajectory of advanced development, it is necessary to dramatically increase R & D and investment in the development of promising areas of technological structure, the establishment of which lays the material and technological basis for a new long wave of economic growth. The currently available institutes for supporting innovation activity obviously do not cope with this task. In order to increase investment in the creation of new industries and the development of new technologies, it is necessary to form a channel for the Bank of Russia to refinance development banks and state-controlled commercial banks for the rights to claim assets under 2% per annum and subject to the use of credit resources on the principles of project financing with a margin of no more 1 % In order to expand the possibilities of financing development institutions, it is desirable to supplement the budget channel of their funding with a refinancing mechanism by the Bank of Russia for 2% per annum for the purposes of project financing against the pledged assets created.
Along with the creation of mechanisms for crediting the growth of production and investment in general, special institutions should be deployed for extended reproduction of industries with low profitability. These include industries with pronounced seasonality, the cycle of capital turnover in which is not less than a year (agriculture, resort and recreational services) and industries with a long production cycle (investment engineering, construction), which are more than 3 years. For enterprises in these industries, interest rate subsidies should be included through specialized credit institutions, some of which are already in place. The source of these funds can be stabilization funds accumulated by the government at the expense of oil and gas revenues. At the same time, it is advisable to convert the Reserve Fund into a Development Budget, the funds of which should be spent on stimulating investment in promising areas of economic growth by funding development institutions. For this purpose, the accumulation of the Reserve Fund should be placed in development institutions, state corporation bonds, and infrastructure bonds.
To reach the advanced development trajectory, it is necessary to repeatedly expand the financing of innovative and investment projects. But it will only make sense if there is a dramatic increase in responsibility for the effectiveness of their implementation. This implies a transition to domestic systems of economic evaluation of projects. In particular, in order to reduce systemic risks, it is necessary to replace foreign credit rating agencies, audit and consulting campaigns with Russian ones in all investment decision-making procedures by government bodies and banks with state participation. Along with this, in order to improve the efficiency of investments, it is necessary to create a system for assessing and selecting priority areas for scientific, technical and economic development within the framework of the strategic planning system being formed.
The implementation of such a comprehensive system of measures to stop capital flight and transfer from external sources of credit to domestic sources while simultaneously de-offshore the economy makes it possible to pursue an advanced development policy based on a multiple increase in investment and innovation activity in key areas of the development of a new technological order. Remonetisation of the economy through accelerated credit growth through the state banking system and the return of part of the capital derived from offshore in the coming 2 of the year allows reaching GDP growth rates of 6-8% per year, investment - by 15% per year, R & D costs - by 20% per year while keeping inflation at one-digit level.
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