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strana.ru
January 9, 2002
No Rocky Ruble as Russian Money Wins Analysts' Vote
Best in emerging markets, say economists
By Michael Stedman
Russia's ruble has been rated the most secure against threats to currency stability in 100 emerging markets worldwide. The verdict is that of Britain's respected Economist Intelligence Unit (EIU) in its annual review of global winners and losers in various categories of "country risk."
Experts reporting yesterday (Tuesday) measured Russia's performance to judge the likelihood of any sharp fluctuations against the U.S. dollar or Euro in the 12 months ahead. "Strong fiscal performance, the still large current-account surplus - estimated at over $33 billion for 2001 - and high international reserves account for the marked improvement in this category in 2001," the assessment said.
"These cushions allowed the ruble to stay steady against the U.S. dollar and the Euro in nominal terms, providing the scope for substantial real appreciation of the currency." The authors believed Central Bank commitment to keeping the real exchange rate stable meant the risk of sharp downward correction in the ruble should stay low, assuming oil prices did not fall much below $18 a barrel for 2002 as a whole. An oil price slump could see the currency weaker and much more volatile, the assessors said.
The Baltic former Soviet Union state Latvia was judged the clear outright winner for the categories of overall risk, economic policy risk and banking sector risk covered in this year's report. Its debt-service ratio of around eight per cent was among the lowest in the developing markets and good progress was being made towards joining the European Union's (EU) first wave of enlargement, expected in 2005, the announcement said. Exports were growing rapidly and "Latvia has successfully diversified its trade dependence away from Russia to the broader EU market," the report noted.
EIU analysts were less enthusiastic about Russia in a recent assessment rating countries according to the cost of doing business locally.
Its 19 of 31 score reflected the fact that Russia was a country of contrasts, the report said in December. "It ranks among the ten cheapest countries for three categories (labor, telecommunications and transport) and in the most expensive ten countries for three categories (corruption, where it ranks second to Indonesia, expatriate costs and corporate taxes.)
Of four east European countries surveyed, Russia was the most expensive, the report said.
"High tax levels and extremely high costs of complying with the Russian tax regime, inconsistent government regulation, the inability of some investors to obtain redress through the legal system, and crime and corruption all dissuade investors," the analysts reported.
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