Russia to borrow 6.3 trln rubles at home in 2012-2014, 600 bln abroad
MOSCOW. Aug 8 (Interfax) - In the period 2012-2014, Russia plans to borrow some 2 trillion rubles per year on the domestic market and 200 billion rubles per year abroad, according to a draft of the country's borrowing policy for those years posted on the Finance Ministry website.
The policy's implementation will take place in conditions of more rapid economic growth, a gradual drop in inflation, steadily rising oil prices, and a relatively weak ruble.
The ministry figures high oil prices ($93 per barrel in 2012, $95 in 2013, and $97 in 2014) will be driven by a relatively high level of projected budget revenues those years. However, factoring in spending, budget deficits will still be run (2.7% of GDP in 2012, 2.7% in 2013, and 2.3% in 2014), which will prevent sovereign funds from accumulating.
"The overwhelming portion of oil and gas budget revenues are planned to be put into financing spending and only an insignificant amount for filling out the Reserve Fund; in 2012 - 3.3%, in 2013 - 1.0%, in 2014 - 0%," the draft says. There are no plans to fill out the National Welfare Fund.
This means, the document says, that the main source for financing the Russian budget deficit in 2012-2014 will be government borrowing, which will grow steadily during these years.
Deputy Finance Minister Sergei Storchak told Interfax that there will be no abrupt growth in borrowing in the next few years, but it will continue to trend up. In his view, he said, "Nothing awful is happening right now, but it must not be forgotten how this [growing spending] ended the last time."
The emphasis in state borrowing policy will be on OFZ federal loan bonds. An average of 90% of Russia's budget deficit will be covered with domestic borrowing.
The Finance Ministry notes that in conditions of increasing OFZ placement the development of the domestic market needs to be a policy priority. In this light, the ministry proposes a range of measures for modernizing and liberalizing the domestic state-debt market.
Russia plans to place Eurobonds in limited amounts based on demand in 2012-2014. The aim will be to maintain Russia's presence as a sovereign borrower on international capital markets and to support continual access to those markets' resources.
The Finance Ministry also intends to limit the placement of Eurobonds denominated in rubles on the foreign market. Storchak said that Russia has successfully placed ruble Eurobonds and "a temptation to actively use the instrument has appeared." "The temptation needs to be resisted, as OFZ is more of a priority for us," he said.
Overall, the amount of borrowing planning both at home and abroad will increase Russia's state debt from 11.2% of GDP in 2011 to 17% in 2014. However, that is lower than the country's debt strength ceiling - 25% of GDP.
Budget deficit financing sources in 2012-2014 (bln rubles):
| Indicator | 2012 | 2013 | 2014 |
| Federal budget deficit | 1570.5 | 1744.3 | 1648.4 |
| State borrowing, including: | 1592.3 | 1601.7 | 1626.1 |
| Borrowing | 2181.7 | 2284.0 | 2474.1 |
| Redemption | -589.4 | -682.3 | -848.0 |
| Domestic state borrowing | 1459.0 | 1465.7 | 1486.2 |
| Borrowing | 1977.9 | 2082.2 | 2273.6 |
| Redemption | -518.9 | -616.5 | -787.4 |
| External state borrowing | 133.3 | 136 | 139.9 |
| Borrowing | 203.8 | 201.8 | 200.5 |
| Redemption | -70.5 | -65.8 | -60.6 |
| Use of Reserve Fund | -164 | -51.4 | 0 |
| Use of National Welfare Fund | 7.5 | 10.0 | 10.0 |
| Privatization | 276.1 | 309.4 | 300 |
| Use of Russian state guarantees | -120.2 | -85.8 | -248.7 |