Russian economy in 2004. Trends and Perspectives (Issue 26)

Publication date
Monday, 07.03.2005

Authors
S. Zhavoronkov, V. Novikov; S. Drobyshevsky; P. Trunin; S. Ponomarenko; I. Trunin, A. Katamadze, V. Nazarov; D. Polevoy; A. Shadrin; O. Izryadnova, Yu. Bobylev; S. Tsukhlo; E. Ilyukhina; N. Karlova, T. Tikhonova, E. Serova, I. Khramova, I. Dezhina; I. Rozhdestvenskaya, S. Shishkin; N. Volovik, S. Prikhodko; V. Zatsepin, A. Lebedeva, V. Tsymbal; A. Radygin, G. Malginov, N. Shmeleva; I. Mezheraups, Yu. Simachev; A. Abramov; E. Marushkina, L. Mihaylov, L. Sycheva, O. Tochilina; G. Malginov , G. Sterni

Series
Russian Economy: Trends and Perspecitves

Contents
Section 1.The SocioPolitical Background 9
1.1. The 2004 Economic and Political Outcomes 9
1.1.1. The 2004 Main Economic Outcomes 9
1.1.2. Key Challenges of the Current Stage of Reforms 13
1.1.3. Economic Growth: Discussions and Problems 18
1.1.4. The 2004 Main Domestic Political Outcomes 26
1.1.5. The 2004 Main Foreign Policy Outcomes 29
1.1.6. Short
and Longer
Run Challenges and Risks 31
Section 2. Monetary and budgetary spheres 32
2.1. Monetary Policy 32
2.1.1. Inflation Development 32
2.1.2. Money Supply in the Economy 35
2.1.3. Money Demand 38
2.1.4. RUR Exchange Rate Movement 40
2.1.5. "Banking Crisis" in 2004 42
2.1.6. The state of the balance of payments 44
2.1.7. Key Actions of the RF Central Bank in the Field of Monetary Policy 49
2.2. State Budget 50
2.2.1. General Description of RF Budgetary System in 2004 50
2.2.2. Analysis of Basic Tax Revenues 51
2.2.3. Budget Expenditures 52
2.2.4. Main Events in the Budget System
and Changes in Tax Law 53
2.2.5. Federal Budget for the year of 2005 55
2.3. Interbudgetary relations and subnational finances 60
2.3.1. Relations between budgets of different levels: basic trends of development 61
2.3.2. The problem of soft budgetary constraints on Russian regional authorities 68
2.3.3. Distribution of grants for equalization of budgetary security of RF subjects: new methods 73
2.3.4. Social policy: changes in the division of respective powers among the federal,
regional, and local authorities. Monetization of social benefits 77
2.3.5. Switching to the new procedures governing the election of the heads of executive authorities
of RF subjects 79
2.3.6. Amendments to the budgetary and tax legislation affecting the state of interbudgetary
relations 81
2.3.7. The law on the federal budget for year 2005 and interbu dgetary relations 109
2.4. Russian Financial markets 114
2.4.1. The Market for Public Debt 114
2.4.2. The market for subfederal and municipal debt 119
2.4.3. Stock Market 131
2.5. Scenario
Based Macroeconomic Forecast for 2005 146
Section 3. The real sector 151
3.1. Macrostructure of Production 151
3.1.1. The GDP: Trends and Factors behind Change in Ultimate Demand 151
3.1.2. Dynamic and Structure of Production of the GDP 162
3.2. The IET Business Surveys 184
3.2.1.The Dynamics of Demand or Industrial Produce 184
3.2.2. Constraints to the industrial growth in 2004 193
3.2.3. Impediments to rise in output formed by staff problems 197
3.2.4. Capacity
related constraints to rising output 203
3.3. Investments in the Real Sector of the Economy 208
3.4. Russian agrifood sector: basic trends in 2004 219
3.4.1. Exhaustion of growth factors and dichotomy forming in the sector 219
3.4.2. Basic shifts in domestic support to agriculture 226
3.4.3. Basic trends in agrifood foreign trade 231
3.4.4. Food markets 237
3.5. Research and Development Sector 247
3.5.1. Administrative Reform in Science 247
3.5.2. Attempting to Reorganize Scientific Institutions 249
3.5.3. Perspective Forms of Integration of Science and Education 252
3.5.4. Optimizing Budget Financing of Research and Development 254
3.5.5. Public Scientific Funds and Private Charity 256
3.5.6. Developing a Program on Foreign Funds and International Organizations 258
3.5.7. HR
Related Problems in Science 260
3.5.8. Expanding Business Participation in Financing Research and Development 262
3.5.9. Private and Public Partnerships 263
3.5.10. Shaping Infrastructure of Innovation Activity 265
3.5.11. Considering Mechanisms of Indirect Regulation in Science and Technology 271
3.6. Sube
sectors of the Socio
Cultural Sphere 273
3.6.1. Health Care 273
3.6.2. Education 284
3.6.3. The Start of Restructuring the Budgetary Institutions Network 294
3.7. Foreign Economic Activity 298
3.7.1. Main Trends in Russia's Foreign Trade 298
3.7.2. Establishing a Single Economic Zone for Russia, Ukraine, Byeorussia and Kazakhstan 308
3.7.3. Regulating Foreign Trade 309
3.8. Military Security of Russia under Present Conditions: Economic Problems 317
3.8.1. Military policies and military
economic activities in the Russian Federation 317
3.8.2. Military expenditures of the federal budget 322
3.8.3. Problems of further modernization of Russia's military organization 328
Section 4. Institutional and Macroeconomic Challenges 332
4.1.Policies in the sphere of property relations 332
4.1.1. Privatization and federal property administration:
some results of the year of2004 332
4.1.2. Changes in the normative - legal basis and federal property management 340
4.2. Ownership Rights Protection and Collapse of YUKOS 359
4.2.1. Selling YUGANSKNEFTE GAZ 360
4.2.2. Economic Rent, Licensing and Fiscal Policy 364
4.2.3. International Expansion Boundaries 368
4.2.4. Revising Privatization Results 369
Appendix. Selling JSC YUGANSKNEFTEGAZ: legislative aspects 373
4.3. The third law on insolvency: the first results and prospects of improvement 380
4.3.1. Legislation on bankruptcy in 1990s through 2000s:specifics of formation 381
4.3.2. Practical implementation of the third law on bankruptcy (2003 and 2004) 391
4.3.3. Perspectives of modification of the institution of bankruptcy 401
4.4. Problems of competitiveness of the Russian stock market 406
4.4.1. Russian issuers' stock market 407
4.4.2. Problems of development of ruble bond market 416
4.4.3. New niches for the Russian stock market 419
4.5. Functioning of the pension system's saving component 421
4.6. Realty market in the Moscow Region: some results and forecast 428
4.7. Issues of Practical Implementation of the Local Self
Governance Reform 437
4.7.1. Normative and Legal Regulation of Reforms 437
4.7.2. Determining the Boundaries and Status of Municipal Formations:
Practice and Problems 439
4.7.3. Other Aspects of Municipal Reform Preparation 444
4.8. Reform of the accounting system in Russia 447
4.8.1. The Concept of Development of Accounting and Reporting in the Russian Federation
in a Medium Term Outlook 449
4.8.2. Draft federal law "On Consolidated Financial Statements" 454
4.8.3. Banking sector 456

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