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Russia and the international economy - Реферат

Oil and natural gas exports remained profitable because estimated rates of internal price growth prevailed.

Imports pattern changed impacted by a growth of the share of technological equipment and manufactured consumer goods. Growing imports of key foodstuffs and non-food consumer goods led to application of certain measures aimed to tighten protectionist regime in order to safeguard domestic industries in 1996 (import quotas introduced).

In 1995 Russian foreign trade turnover with the CIS countries made $ 29.8 billion, increasing by 5 percent in comparison with 1994 figures, it is due, first of all, to a price rise concerning fuel and energy products (14 -- 28 percent on the average). Exports made $ 13.5 billion, or by 9 percent less than in 1994 while imports reached $ 16.3 billion (a 21 percent increase). The share of the CIS countries in the Russian foreign trade turnover diminished by 2 percent as compared with the previous year figures and made 22 percent.

For the first time in the years of the CIS existence Russia had a negative trade balance with these countries ($ -2.8 billion) while in 1994 it had a trade surplus of $ 1.2 billion. Starting from the end of the last year imports from the CIS grew at a fast rate while exports gradually shrank.

The main reason determining the import surplus is an unbalanced, owning to a crisis situation existing in national economies, foreign trade within the CIS framework, that rendering difficulties in settlement of the CIS countries debts, especially those due for fuel and energy resources supply. According to current data, these debts as of January 1, 1996, made Rb 15.6 trillion, or two times more than in 1995. It is hardly justified to attribute Russian shrinking exports to neighboring countries to introduction of the "currency corridor (fluctuation band)" as their fall began as early as April while to the contrary in October some increase in export operations was observed. On the other hand, introduction of the "currency corridor (fluctuation band)" and stabilization of ruble exchange rates enhanced effectiveness of operations of exporters from countries within the former Soviet Union on the Russian market.

As before, the fuel and energy products accounted for the bulk of exports to the CIS member countries (about 50 percent). Total volumes of oil exports diminished by 22 percent as compared with the previous year while export of oil products shrank even more considerably -- by 60 percent, the fact caused not only by payment arrears in reciprocal transactions, but by growing export prices of Russian oil which increased by 28.3 percent in comparison with the last year figures and reached $ 74.9 per metric ton (that making roughly 70 percent of prices under export contracts with countries outside the former Soviet Union). However, now some CIS countries try to reduce their dependence on Russian energy supply. For instance, Moldavia has already signed an oil import agreement with Iran while Ukraine relies upon cooperation with countries of the Persian Gulf. At the same time, Russian oil exports to Byelorussia grew considerably as a result of creation of the common customs area, that allowing Byelorussian oil processing enterprises to purchase oil at prices quoted on the Russian domestic market.

The pattern of Russian exports somewhat changed in 1995 as compared with 1994, for instance coal exports grew by 32 percent, iron ore exports increased twofold and export of ferrous metals also showed signs of growth.

As concerns import operations, the role of the CIS member countries remains an important one in terms of providing Russia with foodstuffs. Thus, the share of white sugar imports from these countries reached 80 percent while their volumes increased by more than two times since the last year. There was also observed an increase in imports of grain, meat, butter. At the same time, a trend to purchase fewer consumer goods in countries within the former Soviet Union in connection to availability of cheaper similar products of quality made in the West manifests itself.

The Customs Union of Russia, Byelorussia and Kazakhstan which was established in 1995 and faces a number of objective difficulties and contradictions caused in the first turn by differences in levels of development and directions of reforms. The Intergovernmental Economic Committee which at last started to perform its functions in 1995 still lacks supranational authority; unsettled problems of mutual payment arrears prevent activities of the Payment Union.

Prospects of foreign trade developments within the CIS cannot be estimated in simple terms. The Commonwealth's objective orientation towards integration faces grave political and economic problems. It is probable that in the beginning of next year a negative trade balance with neighboring countries will remain, in particular due to further decline in export of fuel and energy products.

On the whole, the Commonwealth's future, undoubtedly, will depend on the political situation in Russia. However, the experience of the last few years demonstrates that Russia's partners within the CIS prefer to act according to their economic interests rather than to political rhetorics. The CIS member countries are interested in an economic cooperation with Russia exactly because it has progressed relatively further on the way of reforms. That is why slackening pace of the reform or a complete stop of the transformation may damage trends towards integration to such extent that any political declarations on closer unity and cooperation will be overweighed.

Balance of Payments

The balance of payments reflecting Russian residents' activities in the external sector reveals the following key facts.

In 1995, the strengthening ruble did not hold back the growth of trade surplus: exports increased at a greater rate than imports.

As during previous periods import of services exceeded their exports, that being primarily attributed to developing tourism to countries outside the former Soviet Union. Thus, import of tourist services exceeded imports by $ 5366 million. As a result, current accounts balance was by 43 percent less than the balance of foreign trade. Operations of governmental agencies prevailed in the capital account. External debt grew due both to new borrowing and deferments and arrears in debt servicing.

Non-state sector operations were mostly represented by commercial loans, both in terms of merchandise exports with deferred payments and advance payments. As concerns direct and portfolio investment, they remained at an insignificant level.

Growing reliance of residents on ruble was shown by somewhat decreasing amounts of cash foreign exchange.

As a rule, commercial structures accounted for loans granted to non-residents. The main form of such loans was export loans of enterprises.

Non-repatriation of export proceeds became an important factor destabilizing the financial sphere. In January through September of 1995 it reached $ 5.6 billion, as the State Customs Committee (GTK) reports. This figure is comparable to all foreign loans drawn by the state in the same period.

The amount of payments due to disburse the official external debt exerted more pressure on the Federal budget as compared with the same period of the last year. While in 9 months of 1994 96 percent of actual payments to disburse the official external debt were financed at the expense of external sources and only $ 134 million were received from internal sources, in 9 months of 1995 the figures made 89.5 percent and $ 590 million accordingly.