Authorities have developed two stress scenarios for tests of backbone companies. In the first, quarantine will end in the summer, and oil will cost $ 20 per barrel, in the second, economic activity will be frozen until the fall with oil at $ 10
Photo: Egor Aleev / TASS
The Russian authorities have developed two stress scenarios for the development of a crisis in the economy, designed to test the financial stability of backbone enterprises. Softer suggests that the bulk of economic activity will be frozen throughout the second quarter of 2020, that is, until the end of June. More stringent – that quarantine measures will last two quarters, until the end of September.
The document of the Ministry of Industry and Trade with the outline of two stress scenarios is at the disposal of RBC. Its authenticity was confirmed by a source in the Ministry of Industry and Trade and a federal official. Scenario conditions had to develop The Ministry of Economic Development, and specialized departments (including the Ministry of Industry and Trade, the Ministry of Energy, the Ministry of Transport and others) – organize, together with state banks, stress testing of their strategic companies. The Ministry of Economy has prepared precisely such stress scenarios that are contained in the document of the Ministry of Industry and Trade, confirms the federal official.
Six banks attracted to stress tests
On April 2, the Ministry of Industry and Trade sent a letter (RBC has a copy) to the leaders of the backbone companies, asking them to give their consent to the transfer of data and the results of stress testing to the authorities. Sberbank, VTB, Gazprombank, Russian Agricultural Bank, Novikombank and Promsvyazbank should collect information about their customers, analyze their financial condition and transfer the results to the Ministry of Economic Development and the Ministry of Industry and Trade. It is assumed that similar letters were sent to their enterprises from the list of backbone and other departments. Updated last month the list – 646 enterprises.
“Yesterday, a request for data was received from banks, we agreed,” said Igor Bulantsev, deputy general director, director of economics and finance at Uralchem, to RBC.
RBC sent inquiries to the Ministry of Industry and Trade (oversees more than 300 backbone enterprises), as well as to the Ministry of Energy, which is responsible for more than 70 enterprises from the list. “Indeed, stress tests are currently being conducted,” the Ministry of Economic Development responded to a request.
Earlier, the Minister of Economic Development Maxim Reshetnikov spoke about plans to conduct stress testing of backbone enterprises. how wrote RBC, based on the results of stress tests, a conclusion will be made about the potential problems of the organization – each of them will be assigned a risk category by banks. The audit will show the company’s ability to fulfill its financial obligations during 2020–2022.
The first stress scenario involves:
- toughening quarantine measures in Russia, including the closure of large cities;
- the freezing of economic activity in Russia in the second quarter of 2020;
- growing numbers of countries affected by the epidemic;
- recovery of economic activity from the second quarter in China and from the third quarter in Europe;
- maintaining the price of Russian Urals oil at $ 20 per barrel until the end of 2020, followed by recovery to $ 35 by the end of 2022.
Inflation in Russia, according to this scenario, will amount to 4.5% for the year, and the dollar will cost an average of more than 80 rubles. until the end of the year (including 80.8 rubles in the fourth quarter).
The second stress scenario is based on more stringent assumptions:
- the main part of the territories of Russia will be closed, transport links between cities will be stopped;
- economic activity will be frozen until the end of September;
- new outbreaks of coronavirus infection will occur in China and South Korea;
- restoration of economic activity in Europe and China will begin only in the fourth quarter of 2020 or the first quarter of 2021;
- Urals will cost $ 10 per barrel in the second and third quarters of the year, and by the end of 2022 it will recover only to $ 30.
Under such conditions, inflation may reach 5.5% this year, followed by a slowdown to 4% in 2022. The dollar exchange rate in this scenario will exceed 89 rubles. in the second quarter, after which it will be adjusted to 82.2 rubles. in the fourth quarter. In 2021 and 2022, the dollar will still cost about 82 rubles, it follows from a tough scenario. Now the dollar exchange rate at Mosbirzhe amounts to 76.5 rubles.
The document of the Ministry of Industry and Trade does not contain data on GDP, but it is understood that it will decrease under any scenario conditions.
Scenario conditions for stress tests, by definition, are not forecasts, but serve to assess the readiness of companies for extremely unfavorable developments. However, in this case, the first scenario of the Ministry of Economic Development is as close as possible to average market expectations (quarantine measures before the summer, oil at $ 20, etc.). Last week Urals oil fell in price almost up to $ 10 one day. During stress testing, the Ministry of Economic Development wants to identify the potential vulnerabilities of strategic enterprises to a further possible deterioration of the business environment. In particular, debt coverage ratios (ratio of free cash to future debt payments) and interest coverage on debt will be analyzed.
Earlier agency Bloomberg reported referring to sources that the Ministry of Finance of Russia will make up the updated budget for 2020, based on the forecast oil price of $ 20 per barrel of Urals. This agrees with the first stress scenario of the Ministry of Economic Development. The official macroeconomic forecast adjusted by the pandemic and falling oil prices, the Ministry of Economic Development promised imagine in April.
Scenario analysis of the crisis is also being prepared by independent economists. So, the Center for Macroeconomic Analysis and Short-Range Forecasting (CICAP) at the end of March published three scenarios – “soft”, “hard” and “shock”. The most probable economists of CICAC called the “tough” version of the crisis: the global economy has been in crisis for two years, Russian millionaire cities lose 15–17% of their productivity due to quarantines, and in 2020, Russia’s GDP falls by 3–3.3%.
But the likelihood of a “shock” scenario is also quite high – up to 30%, according to the TsMAKP. This option is based on extremely low oil prices, a sharp drop in Russian exports of oil and oil products, productivity losses in cities with population over one million people at the level of 25%, and the economic downturn reaching 7% in 2020.
At the same time, TsMAKP allocated another scenario – a combination of the “hard” option and active anti-crisis measures of the state, estimated at about 2.5% of GDP. With this option, which the authors call “constructive,” the recession can be mitigated, although it will still continue for two years.
Earlier it was reported that more than 600 companies were included in the updated list of backbone enterprises. Prior to this, there were 300 companies on the list. how wrote “Vedomosti”, the updated list includes airlines (“Russia”, “Siberia”, Utair, etc.), food chains (“VkusVill”, “Auchan”), as well as chains selling non-food goods (IKEA, “ Sportmaster ”,“ Leroy Merlin East ”,“ M. Video ”). The list also included McDonald’s, Burger Rus (a Russian legal entity, Burger King) and Gloria Jeans.
The Secretariat of the First Deputy Prime Minister Andrei Belousov reportedThat the list is supplemented and adjusted on-line, it will be approved by the government on April 10.
Ivan Tkachev, Svetlana Burmistrova, Anna Galcheva