Letter to shareholders – Communication

Dear Shareholder,

With this short relation we want to give you an update about the projects, focusing our attention on the developing of the Russia international crisis, giving you some information which are not usually discussed on the media.

Looking to some important web site (http://www.oecd.org/eco/outlook/russian-federation-economic-forecast-summary.htm) we found the following interesting information:

“The economy is projected to rebound from a deep recession on the back of stronger oil prices, higher wages and lower interest rates, which will boost household consumption and business investment. Structural bottlenecks hamper the diversification of production, and the relatively strong rouble and continued sanctions will restrain non-oil exports. The poverty rate will gradually decline as the labour market strengthens and inflation abates further.

Monetary policy should be eased to support growth, but cautiously to avoid a rebound of inflation. Fiscal tightening, due to spending cuts, might jeopardise the recovery. Additional revenue could come from a higher VAT rate, taxes on the oil and gas sector, and real estate, as well as by broadening the personal income tax base. At the same time, funding is needed for large public investments in education, innovation and infrastructure. Institutional reforms would help lift longer-term growth.

The economy remains relatively closed, as international sanctions hamper higher value added in non-oil activities. The gains from globalisation rest on oil revenues which are unevenly distributed across regions and income groups. Reforming the tax system and investing the gains from higher oil prices in education and infrastructure would help diversify the economy, create more quality jobs and make globalisation beneficial for all.”

Russian Economy

Attached there is a Russian Economic Report produced from the World Bank Group during the 2017 which stated that headline Russian economic and financial trends
indicators are improving.

The federal fiscal deficit grew in 2016 but remained contained……. The general government’s fiscal stance also worsened moderately…….. In early 2017, the federal government balance strengthened on the back of increasingly robust oil revenues……….. Against these dynamics, we expect the economy to go from recession to recovery……….. The poverty rate is expected to decrease because of decelerated inflation and recoveries in private incomes and consumption……… The medium-term prognosis of the Russian economy is favorable.

http://pubdocs.worldbank.org/en/383241495487103815/RER-37-May26-FINAL-with-summary.pdf

We don’t want to give the idea the problems are over but just balance the comments which are usually against the Russia with an overview which seems to give a more realistic opinion of the real situation.

As for our hotels, St Peterburg and Novosibirsk, we are proud of how they are managed and the feedbaks from the clients are quite goods.

We are confident that with time running and with the re-establishment of normalization of political relations between Russia and the other West Countries, The Brickstone Fund can achive more satisfaction, thus abandoning the persistent lack of liquidity that has been plagued by the Fund in the recent years.

Yours Sincerely,
Luigi Pesce
Director