“Sanctions have affected all sectors of the Russian economy, but the country is not in danger of default”

On Thursday, April 21, the State Duma heard the report of Elvira Nabiullina, head of the Central Bank of the Russian Federation. He commented on the state of the Russian financial system under sanctions and answered questions from parliamentarians.

“Russia has all the necessary financial resources, no default threatens us,” he says.

At the same meeting, deputies voted for a new, already third term, which will be five years, for the appointment of Nabiullina to the post of head of the Bank of Russia.

“State bankruptcy of the Russian Federation is a matter of time”

According to the Ministry of Finance of the Russian Federation, as of February 1, 2022, Russia’s external public debt amounted to $ 59.5 billion, including foreign bonds of $ 38.97 billion. In total, the Russian Federation has 15 active term loans. From 2022 to 2047.

European Commission President Ursula von der Leyen said that Western sanctions “are increasingly undermining the Russian economy and are in default”. just a matter of time“.

As the weeks pass, the sanctions are deepening the Russian economy: exports of goods to Russia fell by 70 percent.

The EC chief added that “hundreds of large companies and thousands of specialists” have left Russia and that, according to current estimates, the country’s GDP will decrease by 11%. According to him, “Russia’s state bankruptcy is only a matter of time.” It should be noted that several leading Western rating agencies at once predicted that if Moscow did not close its Eurobond payments, the Russian Federation would fall into technical default.

As Finance Minister Anton Siluanov said, Russia will only pay its foreign currency debt if its foreign currency accounts are not frozen. In case of refusal or non-response of the agency banks, Russia is ready to repay and pay its foreign exchange obligations in rubles.

“However, then there will be a significant change in the payment of the foreign bond debt of the Russian Federation, which will most likely be considered a default. At the same time, the Russian authorities have repeatedly emphasized that there is no reason for Russia to go into real default, for which the situation can only be created artificially.” TASS.

“Protect the economy from external threats”

Speaking before the State Duma on Thursday, Nabiullina said that the existing part of the country’s gold and foreign exchange reserves could be used, if necessary, to provide the necessary volume of imports. “Gold and foreign exchange reserves are a tool that allows us to protect our economy from external threats at critical moments.

And of course gold and foreign exchange reserves are the basis to provide the necessary volume of imports when needed. And when necessary, gold and foreign exchange reserves can also be used,” he said.

Remember after you start Military special operations of the Russian Federation in Ukraine At the end of February, the European Union prohibited operations related to the management of reserves and assets of the Central Bank of Russia, including any legal entity, as well as transactions related to a legal entity or body acting on or on behalf of the Center. Bank.

According to the Russian Ministry of Finance, about half (or about $300 billion) of Russia’s gold and foreign exchange reserves have been frozen. By contrast, in early April, British Foreign Secretary Liz Truss said that more than half of Russia’s gold and foreign exchange reserves (60%, or about $350 billion) had been frozen.

According to the report of the Central Bank of the Russian Federation, at the end of 2021, the volume of foreign currency and gold assets of the Central Bank of Russia amounted to 612.9 billion dollars, of which 481.4 billion dollars were foreign currency assets and 131.5 billion dollars. gold.


“There are problems in many sectors”

Nabiullina accepts new sanctions against Russia affected to all sectors of the Russian economy.

“Economic pressure has even affected domestic businesses with a high degree of import substitution,” he said.

Pointing out that problems have arisen in many sectors, especially in the ready-made clothing sector, the Central Bank also drew attention to the paper sector.

Nabiullina added that since the EU border is closed to Russian ships and European and American ports are closed to Russian ships, serious problems have started in logistics.

According to his estimations, the main challenge may be the underdevelopment of the infrastructure, but its development will take time.

“Low inflation is also bad for the economy”

In his speech, Nabiullina noted that low inflation, like high inflation, can negatively affect the economy. “Low inflation is also bad for the economy. “There must be a level that provides opportunity and interest for manufacturers to develop and expand production,” he explained.

Annual inflation in Russia in March rose to 16.69%, the highest since April 2015, while prices rose 7.53% during the month (the highest in the last 20 years). The monetary policy followed by the Central Bank ensures that annual inflation returns to 4% in 2024.

According to Nabiullina, non-state pension funds (NPFs) are in a stable state – Western sanctions and currency risks have affected them the least. “Pension savings are only invested in ruble-denominated assets, so sanctions and currency risks hit this financial institution the least,” he said.

In addition, the head of the Central Bank noted that the volatility in the stock market did not seriously affect the NPF. “Pension funds don’t pay off the funds all at once, their funds are invested “for a long time,” so it allows non-state pension funds to more easily recover from this volatility in the stock and bond market,” Nabiullina said.

digital ruble

He added that in 2023, the Central Bank plans to conduct the first real settlements as part of the digital ruble pilot.

“We quickly created a prototype of the digital ruble, now we are already testing it with banks. Next year, we will gradually make pilot calculations with the digital ruble, as they say, in the real economy.

According to him, the Central Bank of Russia is ready to negotiate with the government on easing the requirements for taking credit holidays in terms of reducing citizens’ incomes by 30%.


“No rubles course “There is only one way”

March 2022 was marked by significant shocks in the economic sphere and a change in the consumer attitudes of the population. At the same time, emotional mobilization sets very positive expectations from Russians.

“This repeats the trajectory of events in 2014: the growth of optimism is future-oriented and current challenges are perceived as temporary,” the sociologists write.

As early as April, the ruble began to strengthen noticeably against the dollar and euro. “Strengthening the positions of the national currency continued even against the backdrop of new sanctions on big banks. This dynamic can be attributed to the fact that the ruble exchange rate is more affected by trade balance factors: forced sales of 80% of revenues by exporters and operations of importers rather than the movement of capital. Economic Sciences, comments on the situation.

Prices are rising

Against this background, the research holding found that the average index of checks and weekly expenditures of Russians increased until mid-April. “Romir”.

Thus, in the period from April 11 to April 17, the weekly expense index reached 5,401 rubles, which is 3.2% (165 rubles) more than the previous week. Compared to the same period in 2021, expenses are 5.4% higher (278 RUB). Compared to the average value of the last 12 months (5,302 rubles), the weekly spending index is 1.7% or 99 rubles higher.

The average check index increased by 0.9% compared to the previous week (6 rubles). The average cost of one purchase was 663 rubles. Compared to the same period last year, the index shows an increase of 7.1% (44 rubles). Compared to the average value of the last 12 months (657 rubles), the weekly check is 1.1% or 7 rubles higher.


Russia has all the necessary financial resources, the country is not in danger of default – this statement was made on April 21 by Elvira Nabiullina, the head of the Central Bank, whose mandate was extended for another five years. He answered questions from State Duma deputies and gave information about the work of the regulator over the past year. Previously, several leading Western rating agencies simultaneously predicted a technical default for Russia. Read more in the article “socialbites.ca”.



Source: Gazeta

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