Home / Money / Alexei Kudrin about how best to spend the savings of the common man

Alexei Kudrin about how best to spend the savings of the common man

Алексей Кудрин о том, как лучше потратить сбережения простому человеку

Alexei Kudrin resigned as Finance Minister more than four years ago, but still remains one of the Central speakers in the field of politics and Economics.

On 19 March he took part in the second Russian week of financial literacy for children and youth, conducted in the framework of the project “contribute to improving the financial literacy of the population and developing financial education in the Russian Federation”, which the Ministry of Finance is implementing since 2011. Kudrin gave an open lesson in economic literacy to the students of their home of 17-th school in the city of Arkhangelsk, a “Tape.ru” has used this as an excuse to ask Kudrin about the risk of devaluation of the ruble and about how during the crisis to protect their savings not to the businessman and ordinary citizen.

“The crisis has not been overcome till the end”

“Ribbon.news”: the Dollar declines, the ruble and oil prices are skyrocketing. All exhaled — is the crisis over?

Alexei Kudrin: the Crisis goes. In the beginning of 2014 I said that this will be a full-blown crisis, but I didn’t believe it. All considered, we feel the bottom at the end of the first quarter of 2015, then in mid-2015. Now it turned out that the whole year was in the fall, and earlier this year I said that the crisis has not been overcome. If the oil price will remain low, between 35 to 40 dollars per barrel, and this year we will see the decline of the economy from 1.5 to two per cent. We still have processes going on with the slowdown, unemployment increases, and some sectors even falling, although most of the industries, I think, come to stabilize at a low level. The crisis is not overcome until the end. The second half of this year, next year — it will be soft, very slow, creeping out of the crisis.

You gave schoolchildren and students the advice: to keep their savings in three baskets: one third in rubles, one third in dollars, one third in euros. At the same time, we learned that a million is too little to worry about. How the amount of an ordinary person to ask themselves the question of how to keep their money?

If less than three million rubles savings is not worth it to play these games. When savings is less than three millions roubles it might be thought only if you want the money to defer for a year, preferably two if you are not going to spend.

Three million three baskets spread — and forget about them for a couple of years?

In principle, the same. Although favorable situation may occur before six months, then you will want to shift them. Well, if does not work out, then you’d better not touch them.

And to invest us in what?

The safest long — term Bank deposits and bonds, or large public corporations. Currency bonds.

The property falls in price — time to buy, sell or do nothing?

You know, I’m not an expert on real estate markets, they are themselves in crisis are very unpredictable. Perhaps we are now in the Wake of the deflation of the bubble in real estate. He finally got blown out or not blown — it’s hard to say. Theoretically it is correct to start to invest in this sector, when the bubble podsols or blown away. But we need economic growth that began a new demand for real estate.

Today there are a lot of vacant real estate — such as office space. When will economic growth will first fill the current capacity, and then start growing demand for new. Therefore, from the point of view of real estate investment in the next two to three years will not be the best period.

You talked about the fact that the crisis is structural. As an ordinary person to decrease the influence of these factors on their lives?

From the point of view of the government is raising the retirement age, and this will affect everyone. And if to speak about their own individual strategies, this kind of crisis is better to learn new skills, to learn something or to improve their skills within their profession. All the time you need to stay at a level more competitive than average. Teaching is the main anti-crisis measure.

That is, if I have savings only 200-300 thousand — it’s better not to play with bi-currency basket, and to invest in training?

In education — Yes, this is a very good decision.

Will there be a new devaluation of the ruble?

We have the factors that would push the devaluation. First, it is a large budget deficit. The state will sell to the Central Bank its reserve funds, which are now concentrated in the form of currency on accounts in banks; the Central Bank will print money and buy out these reserves from the government. Thus, the Central Bank will add money into the economy. In the current environment this may contribute to further devaluation, but the Central Bank will monitor the situation and try to reduce the money supply through other channels, including the lending banks. Not the best balance to increase the money through a single channel and reduce the through a conventional classical channel. It’s already happened. But most importantly, if this volume utilized the reserves will be large, a large mass of money will be provided to the economy, and this will contribute to the devaluation. In this regard, the high budget deficit is the additional factor of the devaluation of the ruble, meaning the deficit should at least three to four years to reduce.

This means a new budget sequestration?

Or raising taxes, which, of course, would not impact positively on growth.

Will give the forecast, how much will it cost the ruble by the end of the year?

Will not risk. Don’t want to haunt the consciousness.

Is more like the crisis — in 1998, 2008 or, perhaps, 1989.

In it something is from 1998, but only some features — devaluation. However, we are far from the problem of default. We have low debt burden. Reduction of incomes of the population crisis closer to 1998. But what distinguishes it from 1998 and makes closer to 2008-mu — economy is more Mature. In 1998 we had an immature market economy. Now we can say that the basis of a market economy in Russia built, high flexibility of the enterprises response to market indicators.

Who feels that the investment will be reliable — invest who feels excessive costs, it reduces them. In particular, this applies to labour costs. Wherever imported components are expensive, companies immediately cut production as the automobile industry. A flexible exchange rate mitigates some of the consequences for the economy, i.e. faster makes to adapt to the new environment. The flexibility of the economy and its market nature facilitate its adaptation to any external risks — oil prices and sanctions. In this sense, the crisis is not like the others, and I hope that this will allow faster to reach the stabilization and subsequent growth.

But, as you said, structural changes.

Structural changes will occur to some extent in fact: the structure of the economy will increasingly take up new services, they will feel in this new pictures, new drive. This will happen automatically, not by the government. Although what we have come to a crisis, is the lack of a timely motion in this direction.

If there is a relief of the sanctions regime, the positive changes in the economy will be quick?

Not quick, but gradual. Within three to four years we need to restore — but we fully restore the confidence that was before. The flow of investments and new companies, but in General this process will begin. It will be slow but it will happen.

The effect of the food embargo is possible to estimate a plus or minus?

This is a complex issue: there is an official position that a plus, and we really can see the growth of some industries. But really what we have got higher inflation that we have a standard of living failed, is in the negative. But the main minus is not even that, but the fact that modern economies in the world are competing the quality of institutions, rules, practices. People should not just fulfill the law, but to be more effective. Practice efficiency is a complicated thing, it is grown.

When the government suddenly changes the rules of the game, including in foreign trade, it undermines those institutions, they become less effective. Here is a great danger. We cannot create enterprises with a stable Outlook. Why the Turkish case is so painful? A region close to us in level and trade, was suddenly excluded from many elements of our trade. And we are still vulnerable to the fact that it can happen even with someone, if that someone will quarrel with Russia. This is a very big risk for the Russian economy.

Turkey-what to do now — back to be reconciled?

Didn’t need to make such economic sanctions, it was necessary to limit the diplomatic showdown, quite hard, understandable and sensitive, which would in lesser extent affected the business. After all, when we restrict trade, as we hit the business with both sides, in Russian too. And now, when everything has already happened…

I always said that I need some logic in the policy to adhere to. If management chose this policy should follow this policy until conditions change. What happened, already happened, already it is difficult to establish. Need a new round of the restoration of relations, which would have been an understandable reason. No need to fear.

“We are working on a cross-party basis”

Mr Kudrin, this year’s elections, and headed the Committee of civil initiatives (CGI) made a lot of initiatives that could form an excellent election program. Will the Committee to participate in the elections?

We clearly decided last year that we do not participate in the electoral process, with the exception of objective expert monitoring the election. We do not participate neither in writing nor in the support of individual deputies. We try to maintain an objective outside perspective on the election system in the country.

However, it is already known that some members of the Committee go to the polls, in particular single — mandate districts.

We have had such cases, when even in Moscow some of our members tried to move, for example, Nechaev (Andrey Nechaev was the Minister of economy in 1992-1993, was nominated in 2014 in MHD, but did not collect the signatures; in his district won Leonid Zyuganov, the grandson of the leader of the Communist party — approx. “The tape.ru”). But he was also head of the party “Civil initiative”. In personal as everyone has the right to participate in any party, to participate in any party activities, but not activities of the OIG. We as an organization do not participate in the elections. Moreover, we have people from different parties, with different political views. We all say: our activity is a joint public projects that attract people from different political spectrums, we work on a bipartisan basis, do the business, beneficial to all. We try to distance themselves from the Association with specific political platform, it would prevent our development as CHY.

That is, the extension from the CPRF and “United Russia” for your members not ordered?

No, this is their own business.

How do you assess the party’s new draft business Ombudsman Boris Titov? (Titov will chair the elections “the Right thing” — approx. “The tape.ru”).

I would not want to comment. While I understand some of his goals.

You seems to be on the same field: you — for the development of the economy, he is for small business…

In General I support the projects that support the business, but this must be done carefully, too, so I don’t speak. Did not want to comment, we’ll see.

Is there a risk this election left revenge — because of the crisis?

“Polecenie” the ruling party is long overdue. I once allowed myself to say that she’s gone from center-right to center-left. In this sense, it is any left turns.

And it was said that EP is the only party that goes to elections with the liberal agenda.

The economic part of the government and the President — would you say that the program is rather centrist, but not liberals. There are a lot of moderate liberals, but in General, of course, they are related by a common policy of the President and the government. And even if the individual blocks of the Executive power are his political views the center-right, the General course of the party is center-left. This again suggests that the ruling party does not fit the standards of the party.

I think it’s more of a community that is built on hierarchical principle, with a concise system of self-activity or feedback. It is not a party in the full sense, and not merely a bureaucratic vertical. It’s a kind of public education.

What now is your relationship with the “United Russia”?

I have no relationship.

Do you on the eve of elections was not invited to any party?

Not invited, because I’ve already announced that is not included in any party. At the end of last year, I made several statements that I do not participate in this political cycle in the political struggle, not included in any party and will not make any party to support.

And at the end of this cycle — after the election on 18 September?

I do not comment on this issue.

Last question: speaking at your school, you remembered how after the eighth grade to labor practices earned the first money. How many were there and where are you invested?

I gave their mother. Perhaps it was a contribution to the General expenses of the family. I was proud that his first earnings gave, but how we used it — can’t remember now.

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