At the same time, average export prices of logs grew by 2.8 percent and of
cellulose -- by 96.6 percent.
One of the ways to increase export revenues is an expansion of sales
markets for Russian-made weapons and military equipment. Export volumes of
military production made $ 2.6 billion in 1995, that being by 1.7 times
more than in 1994.
The share of machines and equipment in Russian exports to countries
outside the former Soviet Union contracted to 3.8 percent as compared with
5.3 percent in 1994. Development of new competitive and technologically-
intensive products relevant to modern level of requirements on external
markets demands large investment and is time-consuming.
Table 5.2 Volumes of Russian Foreign Trade with Countries Outside
Former Soviet Union in Value Terms (without unorganized trade, US$
billions)
Source: Ministry of Economy of RF.
| |1992 |1993 |1994 |1995 |
| |$ |In % |$ |In % |$ |In % |$ |In % |
| |billio|to |billio|to |billio|to |billio|to |
| |n |previo|n |previo|n |previo|n |previo|
| | |us | |us | |us | |us |
| | |year | |year | |year | |year |
|Foreign trade|79.4 |83.2 |71.1 |89.5 |79.8 |112.2 |97.6 |122.3 |
|turnover | | | | | | | | |
|Exports |42.4 |83.3 |44.3 |104.5 |51.5 |116.1 |64.3 |125.1 |
|Imports |37.0 |83.1 |26.8 |72.4 |28.3 |105.7 |33.3 |117.4 |
|Balance |5.4 |87.1 |17.5 |324.0 |23.2 |132.0 |31.0 |133.0 |
An increase in internal productional costs, first of all at the
expense of energy and raw materials, more expensive loans, growing
transport expenses, aging production assets in extractive and processing
branches, deteriorating productional situation contributed to diminishing
effectiveness of export transactions. At present only export of natural
gas, oil, nickel, timber and lumber are profitable. Export of oil products,
ferrous and nonferrous metals, chemicals begins to bring losses. However,
due to worsening financial situation of Russian enterprises and growing
payment arrears exporters prefer to have hard currencies even at declining
or altogether negative profitability of exports.
The most dynamic and growing market of the Russian Federation are
industrialized Western countries. The largest share of Russian exports goes
to Germany (9.1 percent). The USA account for 6.9 percent, Switzerland--for
5.8 percent, Italy--for 5.6 percent, Japan--for 5.5 percent, Netherlands --
for 4.9 percent, Great Britain -- for 4.7 percent and Finland--for 4
percent of Russian exports.
The pattern of Russian imports has not been changed considerably. As
before, machines and equipment were ranked first and accounted for a 38
percent share of the total imports which grew by 23 percent in comparison
with 1994. It was caused by a necessity to provide key branches of the
national economy with modern technologies and equipment.
A decline in agriculture followed by deteriorating provision of the
populace with domestic-made foodstuffs has led to an expansion of food
imports. Such measures as a rise of import duty rates, introduction of
excises and of value added tax, abolition of preferences concerning import
tariffs, which have been taken lately, contributed to an increase in
internal prices of imported goods thus creating prerequisites to restrain
imports. However, stabilization of ruble somewhat compensated for the
negative impact of growing import duties and excises and helped to increase
imports.
In 1995 imports grew considerably, especially of such products as
sunflower oil (a 232 percent increase), poultry (by 70 percent more),
alcoholic and non-alcoholic beverages (a 67 percent increase), butter (an
increase by 65 percent), frozen meat (by 43 percent more).
In the nearest future dynamics and pattern of the country's foreign
trade will be first of all determined by the internal economic situation,
i.e. whether it shows signs of business revival or not, by changes in the
structure of supply and solvent demand on the domestic market, as well as
by exchange rate policies. The regulatory mechanism of the external
economic activities may also change due to political factors.
In 1996 exports grew somewhat slower (at about 1--3 percent rates). It
was expected that export of major fuel and energy resources would remain at
the same level while such products as metals, chemicals, timber, pulp and
paper would be exported in increasing quantities.
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.
-----------------------
Russian Economic Academy “Plekhanov”
Faculty: IBS
Group: 845
Student’s name: Suprun Diana
MOSCOW 1998
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