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. Last Updated: 07/27/2016

Wage Arrears

n response to "Fall Won't Bring Crisis, July 30.





Editor,


Anders ?slund's article on the Russian budget crisis served to underline the problem with many "top economists" involved with Russia. Not knowing very much about the country's economic situation other than the size of its budget deficit and its rate of GDP growth, they tend to make banal comments such as "although the worst problems have been overcome, Russia still has many important economic issues to resolve."


It is startling that a noted economist like Mr. ?slund suggests that Russia sell long-term state bonds to households through Sberbank. Wonderful idea, but it's been done since September 1995, when OGSZs, savings bonds sold to households through banks (including Sberbank) were introduced. There are now 7 trillion rubles (1.3 billion dollars) of OGSZs outstanding, and more issues are plannedn


Mr. ?slund makes another mistake when he claims that wage and pension arrears "are not very large." The exact figures are unknown, but the amount is over $5 billion. Considering that the much-vaunted IMF loan is less than $4 billion a year, wage arrears appear to be quite a serious problem.


On the whole, Mr. ?slund seems well-intentioned, but not very well-informed.


Peter Kisler


Fixed Income Analyst


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