Bullhead Goes Reeling...

The first sharp reduction of Reserve Fund took place in March. If in January it insignificantly grew (from 137,09 up to 137,34 billion dollars) and in February insignificantly decreased (up to 136,33 billion dollars), in March - most likely because of the compelled additional charging of federal budget (and through it of all budgetary system), - it was reduced at once on 15,17 billion dollars: up to 121,06 billion dollars...

However, that reduction was partially compensated by "swapping" of the Fund of National Well-being: after reduction taking place during last months (from 87,97 up to 84,47 billion dollars for January and up to 83,86 billion dollars for February) it increased a little bit - up to 85,71 billion dollars, however that increase could not compensate reduction of Reserve Fund essentially.

In result the general size of budgetary funds for the first time of the current year appreciably decreased. If for January reduction made 1,4% (from 225,06 up to 221,81 billion dollars) and for February - 0,7% (up to 220,19 billion dollars), for March - at once on 6,1% (up to 206,77 billion dollars); the total reduction for I quarter made 8,1%.

Sharp acceleration of washing out of budgetary funds in March reflects exhaustion of "safety factor" of the Russian enterprises and economy as a whole. As the currency part of these funds makes the basic part (56,8%) of international reserves of Russia, their compression creates distinct threat to stability of the currency market.

According to the new budget hastily developed by the government for 2009, about 2,7 tillion roubles from budgetary funds will be directed to cover budgetary deficiency, that is (proceeding from official forecast of rouble exchange rate) about 77 billion dollars that exceeds estimations in 60 billion dollars being made in the beginning of the year and is indicative of faster deterioration of currency position of our country, than it has been supposed even at the end of January.

Today the most probable scenario of development of events proceeds from the fact that by the end of March enterprises of real sector basically stopped "eating up" of turnaround means being basis of relative and temporal stability observed in December - March. In April relative balance can be still supported due to the growth of non-payments and activization of not monetary ways of payment, however, in May this resource of stability will be exhausted and the Russian economy will enter new coil of recession.

The depth of this recession will be essential. If, by official estimations of Ministry of Economic and Social Development (which name sounds today a cynical sneer), reduction of gross national product in rather safe I quarter of 2009 made 7.0%, the depth of "the second coil of recession" which inevitability was unwillingly admitted by Minister of Finance Kudrin, would be at least half as much, that is it would make 10,5% or more.

This parameter rather close correlates with official forecast incorporated in the federal budget for 2009. Yes, certainly, if to compare it to officially spread forecast in 2.2%, there appears a feeling, as in 1992, of full unreality of the event, - however, it's necessary to compare not with what is propagandized but with real forecast of size of gross national product on the basis of which the budget has been made up. If to compare this size to gross national product of 2008, it appears that even at minimum possible deflator gross national product (that is sizes of rise in prices for the goods and services in all economy, not just in the consumer market using which inflation is being calculated) in 10% (I'll remind that in 2008 it made 18.8%), economic recession will make 11,5%.

If deflator appears even at a level of inflation in 13% predicted for 2009, economic recession in 2009 would reach 14,9%. If the deflator, as in 2008, will exceed official rate of inflation in 1,4 times (having made 18,2% - it's possible due to enormous scales of abusing of monopoly position), recession of gross national product incorporated in the budget - 2009 would make already unprecedented from 1994 17,7%.

However, in view of the forthcoming events scales of economic recession in 2009 from the practical point of view have no principal value.

As the state reacts on social, instead of economic signals (and social protest will be insignificant as forces of the population will be absorbed by creation of stocks of meal for winter), reaction to new coil of recession will be strongly late: one shouldn't wait for it before the middle of August or, most likely, it will be seen only in September.

As the state doesn't have any other tools of management (besides sharpness of the crisis does not allow to use indirect tools of management of economy), it will try to solve the problem by injection of liquidity. It will fail to create effective financial control, as it undermines well-being of the ruling class of corrupted officials and consequently significant part of means directed on updating of liquidity appears on the currency market and reduces international reserves of Russia, having provoked new coil of currency panic and buying up of currency. Accordingly, international reserves will fall and, at least, will come closely to criterion of sufficiency Reddy (roughly speaking 220 billion dollars for 2009 and 170 billion dollars for 2010). Only this fact will provoke global attack of currency speculators, which pressure would not be resisted by the Russian monetary authorities. In fact the only protection - restriction of outflow of the capital from the country and introduction of regulation of the currency market - is inaccessible to them for ideological reasons.

The result seems to be inevitable as default of 1998: currency market gets out of hand of the state and landslide devaluation of rouble between the end of 2009 (that is improbable) and the end of 2010. The last date is the most probable one - and official economists, speaking about the "most difficult" 2010, mean, apparently, this fact.