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The Russian economy will return to growth in 2024, the central bank said.
The central bank said there is considerable uncertainty ahead for the Russian economy.
The war in Ukraine has led to many sanctions imposed on Russia.
Moscow. Russia is looking to buy currencies of ‘friendly’ countries like China, India and Turkey to keep in its National Treasury (NWF). The country’s central bank gave this information on Friday. In fact, Russia, which is facing various sanctions due to the attack on Ukraine, has lost its ability to buy dollars and euros and that is why it is planning to buy currencies of allies. The bank said it stuck to a policy of a free-standing ruble exchange rate, but insisted it needed to reinstate a budget rule that diverts excess oil revenue into a rainy day fund.
Rainy Day Fund is money that is set aside for unexpected and low-cost expenses such as home maintenance or parking tickets. In a report on its monetary policy for 2023-2025, the central bank said it is now discussing various options to return to fiscal discipline and replenish the NWF, taking into account Western sanctions against Russia. “The Russian Ministry of Finance is working on the possibility of implementing an operational system of budget regulation techniques for NWF spending through the currencies of partner countries (yuan, rupee, Turkish lira and others),” the central bank said.
Under budget rules, Russia first bought dollars and euros for the NWF, but not other currencies. Russia stopped daily purchases of foreign currency for the fund in early 2022 amid rising volatility in the ruble. The NWF is managed by the Ministry of Finance, but is part of the central bank’s international reserves, which also include the yuan. As of February these totaled about $640 billion, of which about half was frozen under sanctions imposed by Western countries.
economy and rates
The central bank said the Russian economy would return to growth in 2024 after two years of contraction and inflation would slow to the 4% target by then, allowing the central bank to cut key rates in the range of 5-6% in 2025. “There is considerable uncertainty in the future development of the Russian economy… the main challenge in the coming years is to create conditions for the economy to return to the path of success,” the central bank said.
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tags: russia, Vladimir Putin
First Published: August 12, 2022, 20:32 IST
