The IMF positively assesses Russian economic outlook

An IMF mission from the European Department visited Moscow during 13-17 November 2017. At the close of the mission, the Fund’s experts noted the positive recovery dynamics of the Russian economy.

In the course of the visit, IMF mission members conducted consultations on financial sector development with representatives from the Bank of Russia and other agencies as part of interaction under Article IV of the IMF Articles of Agreement.

This year, the IMF forecasts GDP growth at 2%. According to the estimates by the experts, lending activity continues to increase, banking sector's profitability is recovering, and oil prices will remain relatively high.

The Fund confirmed the efficiency of the Bank of Russia's monetary policy and forecast a further reduction in inflation under 3% at end-2017. In the medium term, inflation is expected to return to the 4% target.

The IMF welcomed the Bank of Russia’s enhanced and revised monetary framework beyond end-2017 and recommended a further gradual easing of monetary policy with due care for persistent inflation and inflation expectations declining dynamics.

The mission commended the deficit reduction planned in the 2018-2020 federal budget underpinned by the new fiscal rule and expressed confidence that the detailed budget spending reviews would help find additional resources to develop Russian economy.

IMF experts assess the Russian banking system as stable, notwithstanding the recent measures to rescue two prominent banks – Otkritie Bank Financial Corporation and BINBANK.

As the key areas of risk mitigation in the banking sector, the IMF recommends strengthening the ongoing asset quality review to ensure banks’ compliance with all regulatory capital adequacy requirements.

The consultations concluded that the Banking Sector Consolidation Fund set by the Bank of Russia in 2017 could improve the efficiency of the bank resolution and rehabilitation process.

The concluding statement of the mission contains recommendations on the further development of the bank resolution framework and implementation of respective international standards, as well as on installing measures ensuring economic agents’ credibility in the financial system.

* See the full text of the end-of-mission statement on the IMF website at the link: http://www.imf.org/en/News/Articles/2017/11/17/pr17448-imf-staff-concludes-visit-to-russia.