January 20, 2025
The Russian economy is experiencing a growing deficit of key world currencies due to the tightening of Western financial sanctions, which, according to the Central Bank of the Russian Federation, have already affected 95% of the national banking system.
According to estimates for 2024, Russia will have received only about $70 billion in foreign exchange earnings in dollars and euros, according to Alfa Bank analysts, citing Central Bank statistics.
According to the Central Bank , Russian exporters exported $386 billion worth of goods from January to November, and by the end of the year, according to the regulator’s forecasts, export revenues will amount to about $420 billion. However, as noted by Alfa Bank, only 18% of these deliveries are paid for in dollars and euros, the key currencies of world trade, which, according to SWIFT, account for 70% of trade turnover on the planet. According to the Central Bank , 43% of exports as of November were paid for in rubles, and 38.6% in “other currencies”, the main one for Russia being the Chinese yuan.
The inflow of major world currencies corresponds to the export income of the economy at the level of the 1990s, according to statistics from the Central Bank: $66.1 billion in 1994, $73.7 billion in 1998, $69.6 billion in 1999.
For comparison: before the war, more than 80% of Russian companies’ foreign exchange revenue came from dollars and euros. And their inflow could have amounted to about $400 billion per year (as of 2021).
In reality, exporters received even less dollars and euros last year — about $50 billion, since a significant portion of revenue was “stuck” abroad due to the strengthening of American sanctions, Alfa Bank points out. In November, Gazprombank — the last of the large state banks that retained access to dollar settlements and the SWIFT system — fell under a new round of restrictions. Along with it, about 50 more banks that serviced foreign trade were included in the “black lists”.
According to MoneyRoo, Russian companies lost every third dollar that they were supposed to receive for goods exported from the country. According to Alfa Bank estimates, we are talking about a sum of about $20 billion, or more than 2 trillion rubles at the current Central Bank exchange rate. “This is a significant amount that has a negative impact on the financial condition of companies and their ability to continue their activities, including import purchases,” Andrey Gusev, managing partner of the Nordic Star law firm, told RBC.
Has anyone ever watched a piece of metal being dissolved into nothingness by electrolysis? How it first gets dimples on its surface that grow into lumpy holes, turning into jagged irregular shaped pits and craters, and how sharp, serrated edges remove its former smooth shape bit by bit until it’s all gone?
That’s the mafia economy.
Yes, like sacrificial zinc on my boat, eaten away, like orcville sacrificing everything, but at least the zinc serves a purpose…