60 MINUTES
- This is the 60 Minutes: Hot on the Trail.
Let's discuss gold. In 2018, the Bank of Russia became the largest buyer in the world of this precious metal. All of a sudden, our reserves increased by over 274 tons. That's almost half, 42%, of all purchases of gold by the world's central banks last year alone. Just imagine! It all was done within the framework of the campaign for the de-dollarization of the Russian economy which was announced in 2018.
- We're probably doing well. There are many indicators showing that everything's okay because gold and currency reserves have increased. We have now 0.5 trillion in the treasury. There are other indicators that show the opposite. Look at the number of divorces, people began to divorce less often but they're still many. Alcohol consumption is growing. What is it? There's a lot of money in the country, but people divorce and drink.
- And 40% of people aren't satisfied with their lives.
"The amount of Russia's international reserves broke the 5-year record. As of April 1st, 2019, it stands at $487.8 billion, according to the data published on the Bank of Russia's website. The last time the amount of international reserves was at a similar level was in April of 2014. The maximum was reached on August 1st, 2008. when the reserves were $596.5 billion".
“After Rosstat stopped publishing monthly statistics on citizens' incomes and spend, studies of the economic and social situation became more valuable. Rosstat, Central Bank, and the RANEPA carry them out. Their studies show a slight improvement of the negative economic sentiment of people in the first quarter of 2019, but only thanks to expectations. Most of all, people are dissatisfied with their incomes and the lack of opportunity to pay for medicine and education. Only 13% of the population can afford the latter as an active adaptation strategy. Another 35% are looking for a new job or a side job. The majority of them economize, spend their savings, or go into more debt.”
- Let's try to process this large amount of data. Nevertheless, how should we treat it? There is a huge amount of money in the country. Our reserves are practically as big as they were before the events in Crimea. Nevertheless, the rest of the data shows that this didn't improve people's lives.
Evgeny Nadorshin, economist: Look. If you're asking for my opinion, it's pretty simple. I wouldn't link the national reserves and personal welfare of citizens even on average. Everything is pretty simple. The changes in the reserves have no influence on the vast majority of the people in the country. This is probably a cautious strategy by the state which is carried out in such a way.
- We remember how the country had huge debts in the 90s, there was no money in the country, and everyone lived poorly. There was a direct correlation.
- That's true but in 1998…
- And in the boom years when oil cost $100, it was considered that everyone lived well. Now, there's a lot of money, but many people are dissatisfied with their lives.
- Look, what does it mean "a lot of" money? There can be a lot of money in the reserves. But note that those reserves were bought with rubles, so every dollar of the reserves has long been working in the Russian economy, many of them for decades. Some of those dollars were bought at the end of the 90s. So, I tell you that you're looking for that money in the wrong place. As I understand it, the changes in the reserves don't influence the vast majority of ordinary people at all. It's neither good or bad. Only the fact that the state uses the reserves for increasing the safety cushion, fearing something, instead of development, can cause disappointment. It actually creates a part of those threats itself. This is a problem. I wouldn't link the reserves to the national welfare.
- So, the state is saving up money because something terrible will happen and we won't experience anything good, right?
Nikolay Kapulkov, analyst: We need stability for economic and social recovery. It's impossible to ensure stability without a safety cushion. Of course, we should have the opportunity to defend our interests both in the economic sphere and the political sphere.
- They provide the situation in 2008 as a clear example. There weren't any sanctions nor the Crimean story back then. But we overcame the crisis of 2008 thanks to the reserves.
- That's what we're told. There are macroeconomic situations, and then there are situations when political pressure is put on the country. In this case, we should be ready to say: yes, we have reserves, if you don't like it, okay, but we'll act in the interests of our state. In some cases, having the relevant resource, we managed to change the situation in agriculture. Everyone, even critics, admits that we began to produce more food. It was possible only because we had money to promptly invest in state support measures as well.
- We're talking about ordinary citizens. Does he care about it? How can we explain to 40% of those dissatisfied with their lives that it turns out that we're saving up money, just in case?
- An ordinary citizen needs a job. He needs a job, infrastructure, so that the state has the opportunity to fulfill its social undertakings. A state can do it only if it's able to ensure general economic security. General economic security is a kind of stash which allows you to act in different situations, be flexible, and respond.
- Why not spend everything that we invest in gold into social needs instead?
- If we open a big piggy bank and give away the money to everyone, people will receive the money once and spend it once. They'll spend them on various foreign goods, personal goods, holidays…
- And what about import substitution?
- They'll spend them on our goods. The money will be spent once, that's it, and then there'll be no money. So we won't have it at all. No, we'll have it due to the fact that the state has an opportunity to invest in the construction of a cosmodrome, there's an opportunity to build a road, such as the Tavrida highway. We're working seriously…
- It isn't being built at the expense of the reserves but the budget.
- We have a reserve that allows us to invest other money. It's different money because we have a general reserve. We have an opportunity to ensure the state's security.
- How much should we save up in order to calm and invest into the people?
- When a private investor looks at a state, if we're talking about large investors, he evaluates the condition of the state. If the economic situation is stable and there's a safety cushion, it's more likely that he'll be ready to take some risks and invest in projects because he understands that the state will be ready to maintain stability.
