Repost on my baby: Russia: MOODY'S: OUTLOOK (FWIW)
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MOODY'S: OUTLOOK DETERIORATES FOR RUSSIAN FEDERATION
Futures World News - January 15, 1998 09:25
STOCK FINANCIAL CURRENCY ECONOMY V%FWN P%FWN
New York-Jan. 15-FWN--MOODY'S INVESTORS SERVICE TODAY stated the outlook for Russia's country ceilings for foreign currency bonds and bank deposits has deteriorated over the course of the past several months.
This is as a result of both short-term and more fundamental developments both globally and within Russia and in spite of several positive developments, Moody's said. The Russian economy seems to have finally stopped its decline and may achieve a modest rate of growth in 1998.
Tight monetary policy has resulted in a significant decline in the rate of inflation, and the Russian Central Bank has introduced a series of measures to defend the trouble. Nevertheless, the inability of the federal government to close its large budgetary deficit continues to underline Russia's fragile fiscal position, said Moody's.
The record on tax collection remains very poor. The tax system itself is clearly in need of reform, but the requisite sense of urgency is lacking both among government and parliament, said Moody's. Barter transactions and the shadow economy are not declining as quickly as expected, thus robbing public coffers of much needed revenues.
Devolution of political power to Russian regions has effectively blocked major redistribution of revenues or revenue-sharing agreements in various fiscal categories. Government short-term borrowing on the domestic Treasury bill market has thus increased quickly. The volatility now besetting emerging capital markets has driven up interest rates and the costs of debt servicing, said Moody's.
The fact that a sizable percentage of Treasury bills are held by non-residents accentuates current difficulties. Recourse by the Russian Federation, various Russian regions and Russian corporations to international capital markets is already evident and is bound to increase in the future. Moody's will continue to monitor closely the likelihood of a short-term liquidity crisis alongside the more broad, slowly developing macroeconomic improvement in Russia.
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George,
in case you read this, I admit that I took partial profits on my TRF position based on the splendid past performance. Still holding on to the other half for either it goes to the moon or down to zero. No need to rush in at present, but the Russian system is more open than most in SEA. They have freedom of press and speech. This is major stuff. They have a good level of basis and higher education. I agree, crime is a problem, but I see this diminishing over the longer term.
Thomas |
