Thread by @Prune602

‼️ Russia: “Government investment in infrastructure fell sharply in the first half of the year”

Yikes…This is going to be a thread.

It’s something I want to you pay attention to because I think you’ll find it as a good reflection of…EVERYTHING

kommersant.ru/doc/6836788

So, a few things to keep in mind specifically as we go through this.

I’ve written several threads where we’ve seen that the Russian economy is not doing well.

I did that whole thread about the 3 phases of the economy and we’re now in Phase 3.

The Russian government’s expenses continue to increase. We see them

- Cutting Budgets to fund the war
- Increasing sources of revenue (taxes, fees, anything they can)
- Drawing from the Liquid Assets of the National Welfare Fund

- While also missing Bond placement targets

This thread it a good source on how the National Welfare Fund liquid assets are plummeting

https://twitter.com/prune602/status/1810491666026897511

This shows how far out The Russian Ministry of Finance is from meeting its goals for placement of Federal Bonds in 2024.

This thread maps out how the Russian Key Rate has changed over time.

https://twitter.com/prune602/status/1808937739221676454

It’s also worth noting the trouble the cement producers were having shipping their goods. This is from May 2024. Keep that in mind.

https://twitter.com/prune602/status/1797030037616562419

All of that 👆will be relevant when looking at this new information.

Also the severe labor shortage. ALWAYS REMEMBER THE LABOR SHORTAGE.

So here we go!

“The change of government and the subsequent formation of new plans for infrastructure development slowed the pace of implementation of one of the key national projects, the Comprehensive Plan for the Modernization and Expansion of Main Infrastructure (CP).”

NOTE: You’re going to see the translation software refer to this project as CP or KP, they’re the same thing.

‼️ “Investments in it in the first half of the year decreased threefold year-on-year, to 27.8 billion rubles. This is only 21.8% of the annual plan. The dynamics are causing concern among contractors who have faced a slowdown in the growth rate of the construction industry.”

“According to analysts, only 21.8% of the planned expenses for the year were transferred to contractors. A year earlier, the level of execution at the end of June reached 50.6%.”

Sidenote: The Russian Ministry of Transport DID get a new Minister in May, HOWEVER.

- The previous Minister was PROMOTED to Deputy Prime Minister for Transport

- It’s not like Putin was going to lose.

en.m.wikipedia.org/wiki/Ministry_…

Although you *could* try to blame some of this on the election and people getting new jobs etc, I don’t think it would account for THIS much disruption, especially considering:

- it’s infrastructure
- there wasn’t a major shakeup

“The Ministry of Transport and the office of Deputy Prime Minister of the Russian Federation Marat Khusnullin did not respond to Kommersant's questions.”

😂 Do they ever?

“The "Comprehensive Plan for the Modernization and Expansion of Trunk Infrastructure" is one of 13 national projects adopted in 2018 to implement the May decrees of Russian President Vladimir Putin.”

Of course

“It includes, in particular, the construction of large-scale railway infrastructure, the Europe-Western China highway, and Northern Sea Route facilities.”

This part of a long trend of Putin making a grand announcements, and then he never delivers. (He lies)

“The low level of project implementation is attributed by the CEO of Sherpa Group Alexandra Galaktionova to the presidential elections, personnel changes in ministries and departments, and the formation of new plans for the next six years.”

Riiiiiiiiight

“The decline is observed against the background of the high base of previous years, notes Elina Kulieva, Senior Director of Corporate Ratings at the Expert RA agency.”

😂 It’s worse than usual

Look at this chart 👀

Note: We don’t know EXACTLY how these funds were spent.

(Do you think they used some on the tiny concrete pyramids (dragons teeth)?)

Do you see the trend in comparison to the stuff I told you to pay attention to?

And if Expenditures have been that low on infrastructure (which usually requires a lot of concrete) & they’re struggling to ship it now…

👉 What does that tell you about the possibility for growth?

Alexandra Galaktionova discusses the weather being a factor and says that this year and into 2025 work on M-12 section to Yekaterinburg should be carried out.

But not clear if the project will actual fund that.

This next part is a problem that we keep seeing Russian government lead entities make OVER & OVER again.

I often describe this situation as an extremely large company thinking they can operate using a small business mindset.

“The reduction in financing of the KP complicates the planning of the activities of construction companies for the next three to five years, warns the CEO of the National Association of Infrastructure Companies Maria Yarmalchuk.”

They may go out of business/lay off employees

“In her opinion, it is important for the industry to maintain capacity utilization: having reduced it, it is difficult to quickly restore it.”

BINGO!

“Special equipment is used for infrastructure construction, it is difficult to use it in the same volumes in other areas, explains the CEO of Smart Engineers Group of Companies Hussein Pliev.”

😂 Also true! Not great if those are sitting around idle for 3+ years

They give some statistics on prices. I’m hesitant to draw conclusions from them, because I’m not sure EXACTLY how they were formed. REAL inflation has been significant. Expenses have gone up.

They also indicate that there is another project being funded. But without details, it’s unclear if the new project would solve the problem of keeping these businesses profitable.

They may not be transferable to the other projects for a variety of reasons.

The article indicates that the Russian government increased the investment volume in the projects.

“The decision allows analysts to make optimistic forecasts for the second half of the year.”

So…maybe? But that’s going to be a boost over what they’re doing now.

We already talked about all the problems they’re having right now, so maybe they should lower their expectations just a little bit.

Just in case 😊

~ The End ~

Bonus:

The picture from this article 😂, are they making they their own Wile E. Coyote references?