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Strategies & Market Trends : Investment in Russia and Eastern Europe
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To: Real Man who wrote (695)9/19/1998 6:36:00 PM
From: Rob Shilling  Read Replies (1) of 1301
 
Vi, the majority of the tax revenues could easily be
from oil and gas taxes. As I remember, Gazprom provides 25% of
the taxes by itself. Lukoil is also a big portion. Now, what I am
saying is exports that used to bring in 6.3 rubles per dollar of sales are now bringing in 16 rubles per dollar. The government was getting
around 12 billion rubles a month and needed something like 24 billion to balance the budget. So if a majority of those taxes were derived from dollar export sales, you could easily see the tax revenue jump to 20 billion or higher. Especially if oil and gas prices go up. There has to be a give and take. If the population has lost buying power due to the ruble, the government would have to be closer to balancing the budget.
Russia just needs a fresh start. The banking system and wage arrears will be taken care of in the next two weeks. If I am right about the budget now being close to balance, there is only a few problems left to tackle to stabilize the economy. Those items are the ruble and inflation. With the budget in balance and a positive current account surplus the ruble will stabilize especially with central bank exchange controls (who knows at what rate).
Of course once stabilization is achieved, everybody will be poorer, but a sounder economy going forward should make things better as time goes on.
Note that oil is going up. Also Hurricane Georges is the first category 4 hurricane in the Atlantic in two years. Right now it is on track to come very close to AHC's huge oil refinery. Higher oil prices are exactly what Russia needs to help get over the hump. Maybe the IMF will help out too, but they don't seem to be moving fast.
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