new saw on america's controversial death penalty the e.u. plugs the flow of drugs used to kill the u.s. inmates. and next year on our tour we explore the chances of the dollar's failure with the world's economy ending up in dire straits and we speak with the first deputy head of the russian central bank. have a spotlight is now. hello

again the welcome to sparkle i.v. interview show on our i love you know and today my guest on the program is for your pride. the year has been particularly challenging for the world to come christine legarde the i.m.f. managing director says the financial crisis has shattered gears i would love pushing it to the break another recession but russia relatively speaking has fared pretty well delivering growth and a balanced budget but still the risks ahead are real and russia remains vulnerable to external shocks like for example falling and as you propose so how will the

country get ca two thousand and twelve we're asking first deputy chairman of the russian central back i don't see how you can. despite global economic instability russia has prospered in two thousand and eleven official say the end you inflation is at historic low it down to seven percent while judy. p's up almost five percent consumer loan rates have dropped significantly reaching the pre-crisis levels and deficit rates have risen the central bank also has the world's third largest foreign currency reserve economists say russian economy's healthier than most european countries russia's recent accession to the w t o is likely to boost the economy further clearing the way for more foreign investment. well first of all what would you cite as the russia's biggest single financial

achievement in two thousand and eleven the biggest achievement is was still alive i mean the financial system is broken i would say put a good on the. banks in good shape in the balances in. position no closer to the end of the. we can see some kind of shortages on the declivity market but that could be issues of pain for the banks in the world it's not their very phenomenon bloss the lending of banks is going up quite rapidly and even we became a little bit nervous about that this year will have around twenty five percent of increase of full and you know the vax in nominal terms i mean so we would rather have some can close it at twenty percent but that support anywhere that support

economic growth well according to the world economic forum ranking russia holds the thirty ninth place in the financial development last year the position was forty so we were one point up is it something we could be proud of or well and if we will live long. given higher than one place one year. all around the stick i would say this is very listed as to mation we still have a lot of problem to be solved i mean the fragility of the system dependence of oil and generally commodity prices some problems in banking regulation for instance the fiscal position i mean non oil and gas a budget deficit is big the primary that's not. the primary deficit this year but

not all guys deficit is still big so this is all the problems will have to solve if we really have to be high in this record to be moving to the world it's a matter of fact that now. it was switzerland ok vladimir putin recently talked to the nation and he said i quote that inflation in russia was expected at slightly over six percent this year a record low level comparable with european levels what contributed to this achievement from europe with our first the monetary situation before in say two follows wouldn't turn and. the. supply of money was very big more than thirty percent a year it misses the big pressure on the market this year fortunately it will have only twenty one percent of my money additional money supply this is number one the

second point is the much better. food prices situation in both global demand and domestic dimension because in previous year it was very high pressure of the food prices on the index of headline inflation that is a number number two. position and probably this but one is. a new exchange rate policy i mean now it's much more flexible so it's not very much dependent on the capital inflows and outflows and the pressure on the committee to cite also i've been in the combination of these five factors. a lot control inflation how good are the chances to keep this low level of inflation next year maybe make it even lower we will have the plans. to have it less

than six percent next year the corridor is a five point five to six that is not easy but that is realistic. i mean. are we. as far as where can produce the demand for a situation it will be most acceptable for for for at least the first half of the year probably all the twelve months of the year the. and the point we are not very much sure of is of course is the food food food prices it would very much dependent of the harvest and other i would say technical things in russia in other countries but we can see it only closer to the middle of the year and also the w t o membership influenced food prices yes of course but not so high because we still have some period of time to adapt ourselves to the full membership

of double duty or. the russian economy i quote will grow food point two to four point five percent in two thousand and eleven putin said during the q. and a session with the nation this is not bad as a result of the year compared to other developed economies but if we take the brics country this is the lowest result and the brics and most of the emerging funds global economies worsen so that means that only russia is the main street you know we're just in the middle of them just in the middle of course the chain those were not exactly bricks. were not exactly brakes and were not exactly developed yet of course it was something in the middle of that and very much dependence of institutions and no economy closer make in which direction you know we will really follow in our future but anyway of course let's compare with the say america and

europe one one point half marks and two percent of growth but from the other side we'll have india and china with say nine. percent but they also have high inflation in here this year will have much higher inflation then russian federation and china not so high but close to it then why do we call or so brics because russia prefers to be the best kid in town the last kid in the city is that it's not the. name of this is one of the guys from goldman sachs. his is his label. so it doesn't really necessary to use the labels you have to understand better the real sense of the problems on the situation so i would say that we have not very high but sustainable growth this year more than four percent next year will it will be close to four probably little

bit lower but that so in a way it's about speaking about rating agencies we just got the news that and that fitch has downgraded six biggest banks in the united states and europe bank of america goldman b.n.p. some of the well according to analysts these banks the dow then reading of these banks is going to influence the world financial situation will it influence that the banking situation in russia. depends the they are all of the agencies are quite contrary. controversial contradiction i would say let's take this example then they done great the servant rate of one hundred stations it was absolutely zero influence to the markets zero influence so i believe

that the little excess and investment bankers they prufrock to make their own analysis or to attract some independent then a little raised who pays the rating agencies so you. but of course of course the situation of banks first in the euro zone but also in the united states that bonds in the balance sheets there have been a logo which do european both sovereign and cup are that and of course that was a point of of dangerous point of notice but and of course it somehow influenced russian banks because as soon as the global markets the are eight or four in stock exchange at the rate of financial institutions first of all but it's going down it influence we can see that our biggest banks which are on the market like this about one car that could be losing their position keep keep it inside this situation that

have. high profits this year the it was fantastic result for say these bob barker will get more than ten billion years dollars as a net profit the if it's a bill half mile and three and a half probably because this is net profit and in that very situation their capital stock is going to just because of the influence of the global financial situation says he will look for his deputy chairman of russia's central the spotlight will be back shortly after the break so stay with us we'll continue this into the. the a.

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survive in the freezing cold. beginning in russia's nose discover the arctic circle on r.t. . mission and free accreditation free transport judges free car maintenance free. three stooges free. the old free broncos modern video for your media projects and a free media dog to our teeth on tom in. welcome back to spotlight i'm angry loving just to remind you that my guest on the show today is see you cry and he's the first deputy chairman of the russian central bank and we're discussing the financial results after two thousand and eleven and maybe

what it's awaiting in two thousand and twelve mr lew cash. the. i.m.f. and i would say mr brett he was interviewed by spotlight couple of weeks ago and he said that russia has the potential to grow six percent per year he said that sitting in your chair would you agree with this assessment from the i.m.f. or. honestly i'm not so optimistic about the potential i believe in you know. future and global prosperity is not so high and russian prosperous are not so high because well very much dependent on the global demand demand for commodities the month while i export and the demand pretty much dependence of the rate of growth in the parts of the world very much believe

that the general rate of awful going down i mean in developed countries will be something around one point half to two percent and even in emerging markets where will go down hopefully not so fast all is speaking about being pessimistic ex finance minister couldn't is a specimen stick as you are and he said a few days ago that the new wave of economic recession has already started and it's here in russia to do share this point of view you know that expression that pessimist is a well informed of that dinner so you are good in that i'm currently i am in. the new comes to russia. the difference between the good and. this terminology because i do not like words like crisis or wave of crisis i believe that this is new reality new market economics this is for a very long period of time and we cannot just easy come back to the good old

times you say gold is ninety's as euro suzi begin only of the century then the global growth was in average around five four five percent i thought no or none of the good over the seventy's there. all this but gone. and that is the the problem there it's not that it's not not the you know damage or something we'll have to understand that that is your normality new reality and to conform and to prepare ourselves to that so it means that grows demand to see not so hard and this driver of russian economic growth will not work very fast of course there are other drivers it means consumer demand of the population and this go up most of all because of the growth of retail

lending i said before that. in general and in. will increase by twenty four twenty five percent but the retail to the consumers more than thirty percent and this is a driver for consumption in domestic consumption but there is a competition between the domestic production and import goods the here and the input is going up really fast and then fought driver is invested in growth but for that purpose will have to you know create better more friendly business environment to the investors well let's hear more from the russian prime minister here's what let him report. and had to say the other day about the state of russian economy. that our economy is expected to grow to rate of four point two four point five percent compared to one percent in europe many leading european economies in

the united states will see no growth next year some european countries are going into recession there are additional figures their economies are going to be in the minus it's not something we're excited about as it may affect us as well nonetheless our fundamentals are better and more stable there is another important index russia is third in the world by the size it was a gold and foreign currency reserves which we have restored almost to the pre-crisis level we also have a ten percent foreign debt that's minimal for countries with developed economies that are going. well now i have another quote from the i.m.f. and it's not so optimistic than what mr perec had to say this but let they say that rocher if the crisis hits really russia will have fewer resources on the budget side to respond then in two thousand and eight when we had this stabilization fund do we have enough reserves to respond to the crisis is today he thinks well

of course we'll have much less results then in two thousand years or so this is correct as all other countries because what was. the most important result of that was the fiscal position where half were great fiscal sockless around seven percent so we can spend money just to support internal demand now that the two previous years will have a deficit this year will help fortune do so plus something between zero point five and one percent of g.d.p. is this up listen what it is not so much and we cannot just easily you know spend money to support the. a month in the country that is the main position i.m.f. . minutes from the other hand the results of the central bank are pushed into the same very close to the before so i mean we can. we can support in

turn or land in our finance operation to supply liquidity to the banks and to help them to adapt themselves to the new reality and to continue a land to the fire no. as far. as starting from the beginning of two thousand and eleven all russian politicians to the highest level we're talking about investment attracting investment to russia and you've mentioned that through today but all this year we witnessed great capital outflow from british according to your analysis a year ago i mean central bank you said your forecast was thirty six billion dollars the the. capital outflow but actually it reached up to seventy four billion dollars is that true and what's the reason that is absolutely true about let's let's divide the problem into pieces that is that figure that

is net private capital outflow there's a difference between inflow gross inflow and gross outflow. you can have the situation then really for instance foreign direct investments goes to the country but some domestic capital is sick in the best person who is outside and in that case you have this negative result and it could be some other different reasons for it so mostly that amount of money this is money market that is money or we're not talking about money running away from russia. well we are also going to cut what what kind of money once again that is and then you know now we'll have to have truck money along with money is money in the money market so that it's in money instrument in the ports it's in some boards in accounts in the banks and so on so

for now then the situation in europe in terms of liquidity is very acute it means that our banks and companies cannot refinance their debt. therefore in debt and then had to wait just in accordance with you know additional scale for instance it means that they did go to last month they have to pay around twenty billion dollars or something like that and that is the reason they have talked humor that money here and fade back to the current us outside of the country but the really important point is direct foreign investment and that is materialized money money invested in the real it's industries in. different kinds of businesses and of course that amount of money cannot be you know easily go in and out this is more conservative invest more long term invest and we

would rather attack this kind of a must but anyway this i'm ari seventy four billion means that the central belt is a monetary authorities stopped. rubles before would just buy the currency and we you know supply the economy with the rubles by that correction now beginning from september we do not buy. we even sell something from our results to the market and it mr allies are obols from form the market in the russia that is the problem not the seventy four is a figure but this situation in the west money market and some banks. at the problems with liquidity and will have to. propose some specific measures to help them. as far as the russian government is not planning to raise taxes to to compensate for the losses in revenues what about the central bank

favor because what we have the lowest taxes in europe the lowest income tax at least it is the central bank in favor of raising taxes no no no we're not. in taxes of course but you see you have somehow balance your budget you have free options number one you know to cut your spending number two to increase your avenues and number three to borrow. i believe the first position is but it is best so if you're in a position to rationalize somehow your spending to have better structure for expenditures and to cut the some extra expenditures you have and that's the reason for you not to raise anything from the market and not guys your taxes thank you thank you very much the only problem is that it's election year and that governments don't like to tell tales to cut expenses use it will actually stay on

the budget thank goodness was alex a guy of tarp funds for life and he's the first deputy chairman of the russian central bank that's a put out for a while if you want to have your say on farm life or have someone in mind to you think i should intervene next time you drop me a line we'll be back with more we're going to comment on what's going in and out of russia and so then they are to to tend. that's a. good .

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