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2017-12-06 12:25:00

IMF: RUSSIA IS STABLE

IMF: RUSSIA IS STABLE

IMFRussian Central Bank: The System Is Stable

Russia recently rebounded from a two-year recession caused primarily by sanctions and a steep drop in oil prices. Today, inflation is close to its lowest for the post-Soviet period, the ruble has appreciated in value, and consumers and companies alike are benefiting from easier credit. We sat down with Ksenia Yudaeva, First Deputy Governor of the Central Bank of Russia, at the sidelines of the IMF's 2017 Annual Meetings to talk about where the economy is headed and what challenges policymakers need to tackle to cement the recovery.

 

Although the Russian economy no longer is in recession, its growth prospects over the next five years look rather low at 1.5 percent, primarily because private investment in sectors other than oil and gas remains limited. How can the central bank help improve growth prospects?

As a central banker, let me talk about what kind of reforms we, as a bank and a regulator, have introduced to support medium- and long-term growth.

In the banking sector, we introduced Basel III regulations and substantially improved supervision. We would like to see a financial sector with healthy banks only. It will lead to increased competition, which will, in turn, make financial resources more available for the real sector.

We have a similar approach to the rest of the financial sector, including pension funds and insurance companies: we are working on improving the sustainability of all these institutions. The goal is to make them more solid and capable of providing long-term resources for companies and people.

We also pay a lot of attention to financial infrastructure and the development of domestic bond and equity markets.

Consumer protection and consumer literacy are also important in a country where banks sometimes charge interest rates that are too high or use other practices that may mislead consumers. That is why we have created an extensive consumer literacy program for different groups of consumers. We try to teach people about monetary policy and different financial instruments through a new website, and through a textbook on financial literacy for teachers, written together with the Ministry of Finance.

We are now thinking about integrating a selection of mathematical tasks on financial issues into basic textbooks. It seems to be a very good way of imbuing the brain with financial literacy: children should encounter and solve these kinds of problems in math classes right from the beginning.

The Bank of Russia recently bailed out two relatively large banks. In view of that, how would you evaluate the current stability of the Russian system? Is the consolidation of the banking system over?

Overall, the system is stable. We have had a turbulent period in the last couple of years. Bad loans increased, and profits and credit growth slowed down. This period seems to have come to an end and the economy and the banking sector are getting healthier.

To address the problem of nonperforming loans, we liquidate or rehabilitate so-called "zombie" banks, which are highly indebted and incur persistent losses. We all know that such zombie banks do not finance growth; they finance stagnation, if anything. Over the last four years, we removed some 350 banks from the market.

Unfortunately, it is still very common in Russia that private bank owners use their bank to finance their businesses. They think this is a safe strategy, but at the end of the day it is a very risky one. From time to time, we also have to deal with banks with bad business strategies: even if their books are correct on the surface, deep down they are insolvent. And there are institutions involved in money laundering; we are closing such banks, too.

Eventually, solving these problems will lead to more trust in a healthier banking sector that takes on a bigger role in financing growth.

The central bank's key interest rate is the lowest since 2014, and at 3 percent, inflation has fallen below the Bank's target. And yet, borrowing costs remain relatively elevated. Why is that, and how does it impact the country's economic growth prospects?

The decline in inflation was partially explained by one-off factors, such as real exchange rate appreciation and a decline in food prices due to large crops. Inflation expectations are still high, so we are decreasing interest rates slowly.

As far as the effect on growth is concerned, high interest rates do not seem to have had a significant negative effect. Instead, it looks like a confidence effect is at play: macroeconomic stability has helped revive growth, and it compensated for whatever negative effect a tight policy could have had.

We see now that the output gap is closing, and the economy is getting close to equilibrium. We do not expect growth to speed up significantly when interest rates go down. It may even stabilize at a somewhat lower level.

This is why we need structural reforms, such as improvements in the investment climate and improvements in infrastructure to help us achieve a higher potential growth rate.

How do you see Russia's relationship with international financial institutions―in particular, the IMF?

Russia is one of the member countries of the IMF so we help finance some of the lending programs. But most of our contacts with the IMF are now related to technical assistance consultations. For example, we did joint work on financial inclusion and pension reform.

Overall, we highly value the expertise of international financial institutions, which carry the accumulative experiences of other countries. As we are going through a number of changes in our economy, we can learn a lot from such experience.

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Earlier:

 RUSSIA:

 

 

 

 

 IMF:

 SAUDI ARABIA - RUSSIA COMPROMISE
2017, December, 4, 23:10:00

SAUDI ARABIA - RUSSIA COMPROMISE

REUTERS - The outcome represents a successful compromise between de facto OPEC leader Saudi Arabia (which wanted to announce an extension throughout 2018) and non-OPEC heavyweight Russia (which wanted to avoid giving such a long commitment).

 

 

         IMF: RUSSIA'S RECOVERY
2017, November, 20, 09:15:00

IMF: RUSSIA'S RECOVERY

IMF - A cyclical recovery in Russia is gaining pace after a two-year recession, with growth expected to reach around 2 percent this year, supported by higher oil prices and easier domestic financial conditions. Nevertheless, growth is likely to remain low in the medium-term, due to demographics, unaddressed structural bottlenecks as well as enduring sanctions.

 RUSSIA'S GAS FOR EUROPE UP
2017, November, 20, 09:20:00

RUSSIA'S GAS FOR EUROPE UP

Gazprom's natural gas supplies to western Europe edged up by 3% year on year in the third quarter of 2017, according to an S&P Global Platts analysis of Gazprom data, as Russian gas deliveries to its core markets continue to outpace last year's levels.

 

 

         IMF: SOUTHEAST ASIA'S TRANSFORMATION
2017, September, 13, 15:10:00

IMF: SOUTHEAST ASIA'S TRANSFORMATION

IMF - When we think about Asia’s economic future, we know that this future is being built on strong foundations—on the richness and diversity of its cultures, on the incredible energy and ingenuity of the people who have changed the world by transforming their own economies. 

 

 RUSSIA'S GDP UP 1.8%
2017, November, 14, 17:40:00

RUSSIA'S GDP UP 1.8%

The Russian economy is recovering from a full-blown crisis caused by a massive drop in prices for oil, its key export, and by economic sanctions imposed by the West over Moscow’s role in the Ukraine crisis.

 

 

 

         WBG & IMF NEED CHINA
2017, September, 13, 15:05:00

WBG & IMF NEED CHINA

We reiterate our commitment to a strong, quota-based, and adequately resourced IMF to preserve its role at the center of the Global Financial Safety Net. We support the work of the IMF to strengthen its cooperation with regional financing arrangements, and its ongoing work to further enhance the effectiveness of its lending toolkit.

 

 SANCTIONS FOREVER
2017, August, 3, 12:35:00

SANCTIONS FOREVER

“It represents the will of the American people to see Russia take steps to improve relations with the United States. We hope there will be cooperation between our two countries on major global issues so that these sanctions will no longer be necessary.”

 

 

         IMF WANT EUROPE
2017, July, 26, 14:35:00

IMF WANT EUROPE

The European Union could do more to convince countries to put EU reform recommendations into practice. For example, targeted support from the EU budget could be provided to incentivize reforms. The EU should also continue pushing for greater integration of the energy, transport, and digital markets.

 

 IMF NEED RUSSIA
2017, July, 17, 13:50:00

IMF NEED RUSSIA

Directors underscored that accelerated structural reforms and broader trade relations can help promote a diversified export mix. They also urged the authorities to strengthen property rights, advance privatization, improve governance, and invest in innovation and infrastructure to build the foundations for higher potential growth.

 

         UAE IS BETTER FOR IMF
2017, July, 17, 13:45:00

UAE IS BETTER FOR IMF

The economy is weathering the post-2014 oil shock well. The key policy goal is to foster economic adjustment to the new oil market realities. To foster the adjustment, especially given downside risks, the momentum in fiscal reforms needs to be sustained and coordinated with structural reforms. 

 

 RUSSIAN STRUCTURAL REFORMS
2017, May, 22, 16:45:00

RUSSIAN STRUCTURAL REFORMS

IMF - advancing decisively on the structural reform agenda to improve growth potential and rebalance growth towards non-commodity sectors.

 

 

 

 

         IMF NEEDS SAFEGUARD
2017, July, 10, 12:20:00

IMF NEEDS SAFEGUARD

“The current period of growth should be used as an opportunity: to further safeguard the financial sector--by building up capital buffers and strengthening corporate and bank balance sheets; to address the issue of stagnant real wages--which can undermine the recovery and fuel discontent; and to confront the problem of excessive current account imbalances--with both surplus and deficit countries playing their part."

 

 МВФ: ВНЕШНИЕ РИСКИ ДЛЯ РОССИИ
2016, November, 30, 18:50:00

IMF: EXTERNAL RISKS FOR RUSSIA

The expected fiscal consolidation and the subdued nature of the recovery are putting in place the conditions for the central bank to resume, in due course, monetary policy easing in a manner consistent with the 4 percent inflation target. However, the pace of easing should take into account the presence of external risks and the need to build credibility under the newly introduced inflation targeting regime.

         IMF: U.S. ISN'T WORKING WELL
2017, June, 28, 15:05:00

IMF: U.S. ISN'T WORKING WELL

All in all, in our judgement, the U.S. economic model is not working as well as it could in generating broadly shared income growth.

 

 

 

 

 

 

 

Tags: IMF, RUSSIA, ECONOMY, FINANCE

Chronicle:

IMF: RUSSIA IS STABLE
2017, December, 11, 09:55:00

SAUDIS OIL FOR JAPAN

REUTERS - State oil company Saudi Aramco last week raised prices for all crude oil grades to Asia in January.

IMF: RUSSIA IS STABLE
2017, December, 11, 09:50:00

U.S. EMPLOYMENT UP BY 228,000

U.S. BLS - Total nonfarm payroll employment increased by 228,000 in November, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in professional and business services, manufacturing, and health care.

IMF: RUSSIA IS STABLE
2017, December, 11, 09:45:00

ДОХОДЫ РОССИИ: +204,8 МЛРД. РУБ.

Отклонение нефтегазовых доходов федерального бюджета от месячной оценки, соответствующей Федеральному закону о федеральном бюджете на 2017-2019 годы, в декабре 2017 года прогнозируется в размере +204,8 млрд руб.

IMF: RUSSIA IS STABLE
2017, December, 11, 09:40:00

OPEC WILL BACK BY 2040

“Tight oil supplies are the wild card. They have reshaped the global outlook in recent years,” observed Ayed S. Al-Qahtani, who directs the research division at the OPEC Secretariat in Vienna. “US tight oil supplies will be the most important contributor but are expected to reach their peak around 2025.”

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