Russian net public debt is down to zero

RUSSIA / FSU POLITICS - In Brief 11 Sep 2019 by Alex Teddy

Putin has always taken debt very seriously indeed. In 1998 Russia was a few billion dollars short of meeting its repayments and the financial system was wrecked as a result. It appears that Putin must have vowed that he would never let this recur. Therefore he pursued a policy of iron fiscal discipline. On assuming the presidency in 2000 Putin quickly paid off debt to the IMF and also to the London Club and Paris Club. Reserve funds were established. The fall in oil prices coupled with sanctions raised Russia's debt. For the first time since 2014 Russia is not a net debtor. In February 2019 Putin boasted that the country's cash reserves could cover external debt. The Gross International Reserves (GIR) outstripped external debt. The government's total debt (central and regional governments combined) on August 1 2019 was USD 248 billion. That is 15% of GDP. This figure would be coveted by many more prosperous nations such as Italy, France, the UK or even the US (246%) or Japan (400%). The government also takes in about USD 248 billion in tax each year. Deposits at the Bank of Russia are USD 269 billion. Russia is in very good fiscal health. Gone are the glory days of USD 150 per barrel of oil. The price is now much lower than in the 2000s. Despite this the economy is not facing collapse any time soon.To achieve such a low debt to GDP ratio cutbacks were necessary. The government has paid the price in unpopularity for such financial retrenchment. Many businesses and individuals are in debt in Russia. But the state is on a sound financial footing. But people are asking was it worth it? Should people suffer privation for the sake of the debt:GDP ratio?

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