It’s Clear That Kudrin Doesn’t Resemble Cranky...

- Michael Gennadievich, You affirm that situation with paying off of the external debt of Russia is far from satisfactory. To what extend it's unsatisfactory?

- After large-scale state external debt redemption being accompanied by significant pennies, only in August of 2006 Russia paid 1 milliard dollars to the Paris Club for the early payment of the debt of 22 milliards dollars, payments on it, ostensibly, turned into technical target which could be solved "without any scandal". But where there is no "scandal", there are publicities and the very trifles in which one could find the devil started in our state. In January - June of 2007 decrease of the external debt - 109,3 milliards roubles - was nearly equaled to the growth of the state internal debt - 110,4 milliards.. Actually, internal loans were taken purely to reduce external debtе - while the budget was exhausted under the weight of "spare" money which there was no time to "sterilized"! Such policy was appointed for the whole 2007: the growth of the state debt (on 161,3 milliards roubles) passed on the reduction of the external state debt (on 161,4 milliards). But in July - August reduction of the external debt was minimal (on 5,9 milliard roubles) and internal loans which net during 2 months made up 45,9 milliards roubles was mainly "frozen" in the budget.

- Is it possible that it all is brought by accidental factors, even by season changes, meanwhile You make logic from it?

- It's not an accident being brought by season but a display of the change of debt policy of the "sample of the year 2006" (internal loans to sink an external debt) by qualitatively new one put into the budget of years 2008-2010. It provides an increase of internal debts in 1,8 times (in the form of state papers): from 293,6 milliards roubles in 2007 up to 522,9 milliards in 2010. Internal state debt could be increased more than twice: from 1,4 trillions roubles according to the results of the year 2007 up to 2,9 trillions roubles at the end of the year 2010. As a result decrease of the state debt from 9,0% of GDP in 2006 and 8,5% in 2007 up to 8,4% of GDP in 2008 will be changed by its increase up to 9,1% of GDP in 2010.

- It's considered that safe level of the state debt for developed countries is 60% of GDP...

- One should take into consideration immaturity of Russia, growing external debt of corporations, first of all state ones, and clear prospects of cheapening of oil in 2009-2010. Nothing is said about the directing of expenditure of the loans and, correspondingly, about their sense in budget documents. There is no plans about large-scale sink of the debt and absence of deficit of the budget excludes directing of such loans on the needs of the society. The only conclusion - internal loans will be "stocked" in the federal budget. Most likely that Reserve Fund will be refilled at their expense (it's fixed on a level of 10% of GDP and will grow during 3 years at the expense of GDP from 3,11 up to 4,48 trillions roubles), there are sources of its refilling in the absence of surplus. Probably, its part will be spent on the Fund of Future Generations, also known as "Fund of Nations Wellbeing".

- Probably, there is some economic sense, "Putin's plan" as they say now, which they don't reveal till the time will come?

- This construction has no economic sense as the profit of the Fund of Future Generations and all the more so of Reserve Fund will be sufficiently lower the cost of the handling of internal loans, apart from the fact that besides percentage payments it's necessary to take into consideration administrative expenses. Besides, rouble means of future Reserve Fund as well as today's Stabilization Fund will be invested into currency instruments which is simply not profitable at the strengthening of rouble and higher levels of rouble instruments. The only rational and at that politically correct explanation consists in aspiration to support at the expense of the budget internal stock market using such intricate way as growth of internal loans. But the scales and the cost of such support are invariably excessive: for the settlement of this problem is sufficient to refinance internal debt that is to sink old loans at the expense of new ones. Thus it's possible to keep unchanged if not the debt itself but at least expenses on its handling that would even let to increase it due to the gradual decrease of the cost of loans.

- It turns out, according to You, that the Minister of Finance Kudrin is simply some "tsar bag of bones" who "decays over gold" ...

- It's clear that Kudrin doesn't resemble cranky became mad on the "freezing" of all money in the budget which is possible to get in touch - either petrodollars or internal loans. From macroeconomic point of view srerilization of internal loans in the budget - is a way to harden financial policy to restrain inflation. However, such way won't work out: restriction of money supply restrains only money inflation provoked by surplus of money. It's not once proved by experiences carried out by the reformers over Russia that it couldn't cope with modern Russian inflation being provoked first of all by total despotism of monopolies. At that restriction of money supply in circulation could deliver sensible blow on bank system thus sharply decrease its liquidity and create the threat of full bank crisis. Posible the sense of expansion of internal state debt is in the fact that financial institutes close to ruling bureaucracy (not obligatory formally state) will receive and opportunity to grant the loans to the state in the priority order - it means that they will get guaranteed profit at the expense to the budget. The volume of the potential profits is massy: percent expenses will grow more than a third - from 156,8 milliards roubles in 2007 up to 247,1 milliards in 2010. At that the payments of the internal debt will grow quicker due to the decrease of the external debt.

- May be GDP will double and Russia will enter the number of the developed countries with market economy and transparent financial intitutes?

- Russia will become developed country not after ritual "doubling of GDP sevenfold" but when it will be possible to explain the policy of the state not from the corrupted motivation of its management. Meanwhile minister of finance Kudrin received advancement having become vice-premier even in the conditions of the dispersal of reformatory block of the government for introduction of the described scheme.