As the crisis unfolds in Russia it is rather interesting to note that of the leading issuers of sovereign national debt Russia has among the lowest ratios in the world . Its debt to GDP ratio is just under 12 %. The World Bank lists its central government debt to GDP ratio based on central government debt minus equity and financial derivatives held by the government as 9.4 %. Look at this ratio in comparison with a number of other sovereigns:
Russia 9.4 %
Switzerland 24.3 %
Sweden 35.3 %
Denmark 47.2%
Finland 51%
Canada 51.9%
Germany 55.2%
Spain 65.9%
Belgium 89.4%
U.S. 96.1%
U.K. 97.2%
France 100.9 %
Italy 126 %
Japan 196 %
Source: The World Bank
Furthermore because of its oil exports its been running a trade surplus not a deficit. So with stats like this why has the ruble fallen so dramatically? Clearly falling oil prices and perhaps also sanctions can explain it. In fact, over the past two days while it has recovered from its low point and is now trading at about 61 to the dollar, still down by close to 25 % . But the currency speculators may well have oversold the currency. On the other hand we know that markets never behave totally rationally and overshooting in a panic sale is a rather common phenomenon. It may well be that too many Russian business people have speculated in overseas investments and real estate but its not clear why this alone could severely damage the Russian economy given that the total ratio of the external debt to the GDP is 9 %;external debt service compared to exports 32 %; international reserves to external debt ratio 253 % and value in $ of per capita debt $5072 . (Source : The Bank of Russia . the total debt includes the external debt of the central bank, the banks and other sectors) We shall see what develops over the coming weeks both in oil prices and exchange rates. Gas prices in Montreal are now 1.09 a litre.
haroldchorneyeconomist 