three. three. two three. three blown video for your media project c.e.o. don carty dot com. good early morning to you it is five thirty am here in the russian capital i'm lucy counting up and of course you're watching our t.v. . there russia needs democracy but not chaos and those are words from president dmitri medvedev in his last state of the union address the president said that the country is on the brink of a new political era where every voice will be heard he also outlined plans for widespread reforms the country's political system first in line. no arab league observers arrived in syria as a conflict there sees its bloodiest period yet over two hundred are thought to have

been killed in just two days despite more international sanctions being imposed against a mask. and a rock over seventy dollars in baghdad as the capital was rocked by a wave of terrorist bombs less than one week after the american military's withdrawal from the war torn country in the region violence is raising questions already over the entire u.s. invasion and the eight year campaign. and up next our interview shows spotlight on today's program although no if asked the first deputy chairman of the russian central bank alexei what if russia is vulnerable to the external shocks including of course the eurozone crisis.

hello again the welcome. to you shall. i love or not and today my program is. right. here has been particularly challenging for the world because christine legarde the left managing director says the financial crisis. pushing it to the great 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 fall and as you propose so how will the country

get two thousand and twelve asking first deputy chairman. back to see that. 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 g.d.p. 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 a russian economy's healthier than most european countries russia's recent accession to the w cheatle is likely to boost the economy. clearing the way for more or less. well first of all what would you cite as the russia's biggest single friend and she would she have been in two thousand and eleven the biggest achievement is was still

alive i mean the financial system is broken i would say but a good i mean the. banks are good shape and balances in the cutthroat position. now closer to the end of the. we can see some kind of shortages on the declivity market but that could be issues of time for the banks in the world it's not there 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 banks nominal terms i mean so we would rather have sub can closer to 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're we're one point up this is something we could be proud of or considers well and if we will live long and even higher than one place where we're. all on the stick i would say this is their list of estimation 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 poor. in banking regulation for instance the fiscal position i mean our non oil and gas a budget deficit is big the primary that we will have not. a primary deficit this year but none of the guys deficit is still big so this is all the problems will

have to solve if we really have a business to be high in the struggle to be moving to the well 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 for you are first the monetary situation before in say two fall isn't ten and. the. supply of money was very big more than thirty percent a year it was 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 their mansion and domestic dimensions because in previous year it was very high pressure of the food prices on the index of headline inflation that is the number number two position and probably the what one is. 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 mean the combination of these five factors helped us 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 so easy but that is a realistic. i mean. are we. as far as we're can predict the mantra situation it will 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 be 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 may influence 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 the of the cio. 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 among the brics and while the emerging funds global economies worsened 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 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 are now economists close to 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 moxon two percent of the grove but from the other side we'll have india and china with say nine. percent but they are they also have high inflation in here this year will have much higher inflation than russian federation and china not so high but close to it then why do we call or so of bricks 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 his 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 bought sustainable growth this year more than four percent the next c.e.o. bill it will be close to four probably little bit lower but around that so

in a way it's about speaking about rating agencies we just got the news that that fitch has downgraded six biggest banks in the united states and europe bank of america goldman sachs 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 would say let's take this example then they done great the seventh rate of one hundred states 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 have a priest. 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 that have a logo which the european both suffer and cup are that and of course that was the 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 the rate of financial institutions first of all but is going down it influenced sausan we can see that our biggest banks which are on the market like this about one call that have been loosened their position keep keep it inside this situation then. i have high profits they say yeah the it was fantastic

result for c d's bob anchal will get more than ten billion years dollars as a net profit the half mile and food and stuff probably because this is net profit and in that very situation that capital stock is going to just because of influence of the global financial situation says seat when you cry first deputy chairman of russia's central in the spotlight will be back shortly after the break so stay with us we'll continue this into the. wealthy british style it's not on the.

markets why not. find a. what's really happening to the global economy is a report on r.g.p. . the official ulti application. i pod touch from the i q sampson. life on the. video on demand. is a minefield comes an r.s.s. feed now in the palm of your. question on the dot com. welcome back to spotlight i'm angry knob and just a reminder that my guest on the show today is i like to see you cry and he's the

first deputy chairman of the russian central bank and we're discussing the financial results off two thousand and eleven and maybe what it's awaiting in two thousand and twelve mr cash. the. i.m.f. and i would say mr perry bret he was interviewed by spotlight a couple of weeks ago and he said that russia has the potential to grow six per cent per year he said that sitting in your chair would you agree with this assessment from the i.m.f. or the wall on us that i'm not so optimistic about the potential i believe that in. future and global post focus not so high and prosperous and not so high because well very much dependent on the global demand demand for commodities in the month while i export and they don't want

pretty much dependence on the rate of growth in the parts of the world i very much believe that the general right or wrong. it will go on down i mean in developed countries will be something around one point two percent and even in emerging markets where it will go down hopefully not so fast all is speaking about being pessimistic ex finance minister couldn't is as pessimistic 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 you share this point of view you know that expression that pessimistic is of well informed of the best in a so you are good in our government our money i mean. the new comes to russia. the difference between the good and miss the terminology because i don't like words like crisis or wave of crisis i believe that this is

a 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 zero suzi looking in only this 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 by the government . and that is the the problem there it's not there it's not not the you know damage or something we'll have to understand that that isn't your normal it's in your ability 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 decide to go up most of all because of the growth of retail. i said before that. genoa london. will increase by twenty four twenty five percent but the detail to the consumer is more than thirty percent and this is a driver for consumption in domestic consumption but there is a competition in their midst of production and import goods they hear and the input is going up really fast and ford driver is investing in growth but for that purpose will have to you know create better and more friendly business environment to the investors well let's hear more from the russian prime minister here's what wedeman put in 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 their operational 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 the 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. well now i have another quote from the i.m.f. and it's not so optimistic then what mr perec had to say this but let they say that russia if the crisis hits reality 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. the things of course will have much less results now than in two thousand years ago so this is correct as all other countries because what was of. the most important reserve that was the fiscal position will have a great fiscal sockless around seven percent so we can spend money just to support internal demand now the two previous years were for the deficit this year will have fortune to her so close something between zero point five and one percent of g.d.p. is discipline but it is not seven and we cannot just israeli you know spend money to support demand 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 that we had before so i mean we can. we can support internal landen by our finance operation to supply liquidity to the banks and to help them to adapt themselves to get new reality and to continue land to the fire no force as far as i remember starting from the beginning of two thousand and eleven all russian politicians to the highest level were talking about investment in attracting investment to russia and you've mentioned that to 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 but let's let's divide the. into pieces that is that figure that is net private capital outflow this difference between inflow of gross info and gross outflow. you can have this iteration then really for instance for in direct investments goes to the country but some domestic capital is sick in the best facilities 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 that we're not talking a bird money running away from russia. well we are also going to cut what what kind of money once again that is that and then now now we'll have we'll have chuck money

along with money is money in the money market so that is in money installment in the port 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 that that. therefore in that and they tried to wait just in accordance with the additional scale for instance it means that in the last the month they have to pay around twenty billion dollars or something like that and that is the reason they have talked humiliate money here and fight back to the creditors outside of the country but the really important point is direct foreign investment and that is materialized money money invested in the real assets in industries in different kind of businesses and of course that amount of

money cannot be you know easily go in and out this is more conservative investment long term investor and we would rather attack this kind of a must but anyway this is a moderate seventy four billion means that the central belt is a monetary authorities stopped and it had to rubles before would just buy the currency and we you know supply the economy with the rubles by that corrections 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 the situation in the west money market and some banks. at the problems with the community and will have to. propose some specific measures to help them.

as far as i understand the russian government is not planning to raise taxes to to compensate for the losses in revenues what about the central bank are you 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 are not like ours 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 in number two to increase your eyewitness and number three to borrow. i believe the first position is but it is the best so if you're in a position to rationalize somehow you're 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 race 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 you to cut expenses shoes that will actually stay on the budget thank goodness was alex a new guy a top aide on father's life and he's the first deputy chairman of the russian central bank that's it but after all if you want to have your say on fog lights or have someone in mind for your plane crashed in phoenix trying to drop a line we'll be back with more personal comments on what's going on in and outside russia and so then they are to you and to. this is.

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