OECD Economic Surveys 2004: Russian Federation

Table of contents......Page 4
Basic statistics of the Russian Federation......Page 8
Executive summary......Page 9
Assessment and recommendations......Page 12
1. Sustaining growth......Page 24
Internal demand rapidly replaced external demand as the main driver of growth......Page 25
… but industrial production has overwhelmingly been driven by resource sectors......Page 26
Figure 1.1. Contributions to GDP growth, expenditure side view......Page 27
Industry has held up relatively well in the face of increasing competitive pressure......Page 28
Figure 1.3. Structure of GDP......Page 29
Table 1.3. Importance of factors that increase competition for Russian industrial enterprises......Page 31
Growth depends less on oil prices than is usually claimed......Page 30
Box 1.2. Estimating growth at average oil prices......Page 32
On the supply side, growth has mainly been driven by productivity increases......Page 33
Figure 1.5. Decomposing growth......Page 34
On the demand side, growth has increasingly been driven by a consumption boom......Page 35
Prudent fiscal policy has been the authorities’ most important contribution to sustaining growth......Page 36
Table 1.5. Federal budget: key variables under different oil price assumptions......Page 37
Box 1.4. Reforming fiscal institutions......Page 38
Table 1.6. The federal budget......Page 40
Table 1.7. The general government budget......Page 41
Table 1.8. Foreign debt......Page 42
Reduced uncertainty about property rights contributed to a boom in oil-sector investment......Page 43
Increased production by private oil companies has been a key factor in recent GDP and export growth......Page 44
Strongly decreasing net capital outflows have put additional upward pressure on the rouble......Page 45
Figure 1.9. Exports......Page 46
Table 1.10. Balance of payments......Page 47
Monetary policy has been pragmatic, but complicated by the pursuit of partly conflicting policy goals......Page 48
Figure 1.11. Decomposition of the current account surplus (capital account view)......Page 49
Industrial consolidation and labour reallocation has contributed to efficiency......Page 50
Figure 1.14. Inflation......Page 51
Table 1.11. Output share of integrated business groups and state-controlled monopolies......Page 52
Economic growth has led to increased living standards…......Page 53
… and more optimistic consumer expectations......Page 54
… and has so far failed to improve key health or demographic indicators......Page 55
Figure 1.17. Share of population living under subsistence level, by age group......Page 56
Sustaining high growth rates will require continued strong growth in exports......Page 57
Sustained growth in hydrocarbon exports will probably require new pipeline capacity…......Page 58
… as well as gas sector reform......Page 59
Russia will have to cope with external vulnerability......Page 60
Box 1.5. The fiscal stabilisation fund......Page 61
Continued vigilance will be needed to avoid “Dutch disease”......Page 63
Resource wealth can make it harder to create sound institutions......Page 65
The structural reform achievements of the last three years are considerable…......Page 67
… but much remains to be done, especially with respect to implementation of reforms already adopted......Page 68
Banking and monopolies reforms are needed to make markets more efficient......Page 69
Monopolies reform helps highlight the need for further social reform......Page 70
Improving the quality of state institutions remains an urgent priority......Page 72
The WTO accession process should bolster the government’s structural reform efforts......Page 74
Notes......Page 75
Bibliography......Page 80
Table 1.A1.1. Domestic competition......Page 84
Table 1.A1.3. Upstream capital spending by company......Page 85
Table 1.A1.4. Oil output: crude and condensate production by company......Page 86
Table 1.A1.6. Car ownership per thousand inhabitants......Page 87
Figure 1.A1.1. Quarterly contributions to GDP growth, expenditure side view......Page 88
Annex 1.A2. Structural reform progress......Page 89
Annex 1.A3. Fiscal federal relations: trends and prospects......Page 97
Table 1.A3.1. Revenue and expenditure shares of sub-national governments 2000-031......Page 98
Table 1.A3.2. Per capita regional revenues, relative to the all-Russian average, before and after allocation of the FFPR1......Page 99
Table 1.A3.3. Distribution of budgetary income......Page 103
Table 1.A3.4. Estimated changes in expenditure responsibilities and revenues, 2004-05......Page 104
Table 1.A3.5. Differences in the regional expenditure structure......Page 105
Annex 1.A4. Developments in the small business sector......Page 108
Box 1.A4.1. How large is the PBOYuL sector?......Page 109
Figure 1.A4.1. Small business employment by sector......Page 111
Table 1.A4.2. Small business output growth......Page 112
Annex 1.A5. Pension reform......Page 114
Box 1.A5.1. Non state pension funds......Page 115
Labour productivity and unit labour costs......Page 122
Figure 2.1. Productivity: levels and changes in the 30 most important industrial sectors......Page 123
Figure 2.2. Initial productivity levels vs. productivity growth (by industrial sector)......Page 124
Figure 2.3. The composition of industrial productivity growth......Page 125
Figure 2.4. Employment and labour productivity......Page 126
Figure 2.5. Unit labour costs by industry......Page 127
Comparative advantage and disadvantage......Page 128
Table 2.2. Revealed comparative advantage (RCA)......Page 129
Notes......Page 132
Bibliography......Page 133
Figure 2.A1.1. Value added per employee......Page 134
Figure 2.A1.3. Initial profitability levels vs. productivity growth (by industrial sector)......Page 135
Table 2.A1.1. Labour productivity changes (30 large industrial sectors)......Page 136
Table 2.A1.2. Decomposition of labour productivity (30 large industrial sectors)......Page 137
Table 2.A1.3. Developments in unit labour costs by industry......Page 138
Figure 2.A1.4. Initial unit labour costs vs. changes in employment and wages......Page 139
Table 2.A1.4. Detailed structure of exports, 2003......Page 140
Table 2.A1.5. Detailed structure of imports, 2003......Page 141
Table 2.A1.6. Changes in revealed comparative advantage, 1997-2003......Page 142
Table 2.A1.7. Import competition......Page 143
3. Natural gas......Page 144
Table 3.1. Russian natural gas production and exports, 1999-2003......Page 145
Pricing, subsidies and the operation of the domestic market......Page 147
Table 3.3. Natural gas tariff increases and CPI/PPI inflation......Page 150
Table 3.4. Average natural gas tariffs for households and industrial consumers......Page 151
Investment needs......Page 153
Gas sector reform......Page 155
Information and regulation......Page 156
Separating the infrastructure......Page 159
Exports: monopoly, taxation or liberalisation?......Page 162
Notes......Page 165
Bibliography......Page 169
Annex 3.A1. Energy prices and implicit subsidies to households and industry......Page 171
Table 3.A1.1. Payments to RAO UES, 2nd quarter 2003......Page 173
Annex 3.A2. Survey of gas purchasing and prices......Page 178
Box 3.A2.1. Questions on gas consumption and pricing......Page 179
Table 3.A2.3. Survey sample by scale of consumption......Page 180
4. Power sector restructuring......Page 182
Overview of the electricity sector......Page 183
Figure 4.1. The structure of the Russian electricity industry, 2002......Page 185
Table 4.1. Increase in regulated producer prices for electricity......Page 186
Table 4.2. Regulated wholesale tariffs for electricity, 1996-2002......Page 187
Table 4.3. Energy supply arrangements and consumer prices, Samara Oblast’ 2003 (RUB/kWh)......Page 188
Reform plans......Page 189
Figure 4.2. The structure of the Russian electricity industry, 2008-09......Page 191
Implementation issues......Page 193
Asset restructuring......Page 194
Generation and supply: creating competitive markets......Page 196
Transmission and distribution: monopoly regulation......Page 199
Related reforms......Page 201
Social impact......Page 202
Table 4.4. Structure of electricity consumption......Page 203
Notes......Page 204
Bibliography......Page 207
Annex 4.A1. The electricity reform plan......Page 209
Figure 4.A1.1. Electricity price formation after market liberalisation......Page 214
Box 4.A1.1. Major milestones in power sector reform......Page 215
5. Banking reform......Page 218
Size and structure......Page 219
Table 5.2. Selected balance-sheet indicators of the Russian banking sector......Page 220
Post-crisis recovery......Page 222
Table 5.4. Selected balance-sheet indicators of the Russian banking sector......Page 223
Table 5.5. Banking sector credit risks......Page 224
The environment of commercial banking......Page 226
Deposit insurance......Page 228
Table 5.6. Net debtors and creditors of the banking system......Page 229
Substance-over-form regulation......Page 231
Information and transparency......Page 233
“Developmental” reforms......Page 236
The future of state-owned banks......Page 237
Box 5.1. Financial market development......Page 238
Notes......Page 242
Bibliography......Page 245
Annex 5.A1. Russia’s deposit insurance law......Page 249
Annex 5.A2. The new bank supervision framework......Page 256
Table 5.A2.1. Summary of prudential ratios......Page 259
Annex 5.A3. The transition to international accounting standards......Page 262