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Davos: Russia’s anti crisis plan not delivering bang for its buck?
Published: 28 January, 2010, 18:15
Edited: 10 February, 2010, 11:04
TAGS: Investment, Crisis, Budget, Economy
Though the Russian government is beginning to see some of its anti crisis funds be repaid, questions are being asked about how well the bailout money was spent.
The Russian government spent over $200 billion, or 14% of GDP, supporting the Russian economy during the crisis, with much of that going to businesses and banks.
However, according to Deputy Finance Minister Aleksey Savatyugin, some of the money is already beginning to come back.
“The government aid provided to banks and industrial companies has already started to return. The help was mainly in the form of credit lines. So it means not only the recovery of capital but also interest. It was credits from the Central Bank and through Vnesheconombank. We are seeing a good return ratio.”
But just how much of the money that was lent out was put to an effective use is debatable, and Garegin Tosunyan, head of the Association of Russian Banks, says the analysis is not comforting.
“There are experts who estimate that 1 point of government anti-crisis aid provided 1 point of efficiency in countries like the US. In developing countries it was around 0.5 and in Russia it was even lower, at 0.01,” Tosunyan claims.
It is hard to believe that Moscow's aid was one-hundredth as effective as that handed out by Washington, but even with a more sympathetic assessment of Russian efficiency, many questions need to be answered. The most important of them is what the government can do to get more bang for its buck in the event anti-crisis measures are needed again, which could be all too soon if there is a double dip recession.
28.01.2010, 14:30
No more privileges for Belarus on Russia’s oil exportAfter a nearly month-long dispute, Russia and Belarus have finally come to an agreement on oil deliveries. |
29.01.2010, 11:42
2 comments
Davos: privatization of Russian state-owned businesses key to funding deficitRussia's leading bankers have been using the World Economic Forum in Davos to push for the privatization of their companies, with the heads of Sberbank and VTB being the most notable. |
Of course any government program should be questioned and audited, especially ad-hoc programs to address emergencies. Otherwise you get the free-for-all we had in USA in late 2008, when Congress was stampeded over a cliff by hysterical Treasury and Federal Reserve officials (the same people are now in charge of Treasury - ugh). Better to have an audit built into any government program (even after the fact) to determine whether it was effective and least cost, and to prevent all the money being funneled to one bunch of crooks.
I totally agree on the need for audit and transparency. I think I can follow the idea of line of credit and an interest to be paid. I am not so sure I follow the application process for TARP money, and how exactly is that money characterized. When Obama said that money is being returned, I get confused, since many analysts say that in fact it is not true. The money returned is actually taxpayers' own money, as Banks got some tax breaks. So those taxes that will not be paid, became "returned" money. It is a mess. Since most of the money that went into stimulus has not been yet spent, and if and when spent, it will not be clear how will such stellar performance be assured. How does this "expert' know what kind of return exists in different economies. This "data" is nonsense, as it is absolutely not possible to make any comparisons, let alone actuarials. Inventing stuff seems to be a well paid job. How can I get one? No, I would rather go into climate change, and tell everyone of some other glaciers melting (Hymalaya's have been spoken for).