Press conference of Bank of Russia Governor Elvira Nabiullina on 17 April 2020
Good afternoon, dear colleagues
We are beginning another weekly press conference on the current situation and the measures the Bank of Russia has been implementing to mitigate the consequences of the coronavirus epidemic for Russia’s economy and financial system.
I will start out with the situation in the global economy and international financial markets. After the stabilisation over the previous
Volatility in the Russian financial market also increased, although to a much lesser extent than in March. The exchange rate and the stock market also adjusted. Yields of federal government bonds slightly rose on the short end, while remaining almost unchanged on the long end. Over this week, non-residents’ net purchases of federal government bonds were small, with their share remaining almost the same (approximately 31%). The Ministry of Finance offered bonds totalling 97 billion rubles that were purchased by both domestic investors and non-residents whose share amounted to 26%.
As to oil prices, they have not stabilised yet. The large-scale OPEC+ agreement to limit oil production should contribute to a faster recovery of the balance of supply and demand in the global oil market. However, this week the Urals oil price was also slumping to USD
As regards positive signals in the global economy, I would focus on the information that a number of European countries and the USA are beginning to slightly ease the restrictions or are at least pondering about this. When this turns into a trend, the global economy will begin to recover. Anyhow, overall this year will be rather hard for the global economy. In its forecast published this week, the IMF assumes that the world economy will decline by 3% in 2020, which is more than during the
Now, on the situation in the Russian economy. The recent survey of businesses in Russian regions shows that increasingly more companies are suffering adverse consequences of the restrictions. Over 30% of the businesses reported supply problems, and nearly 50% complained about order cancellations or reductions. Companies recording a rise in demand for their products continue to account for 13–15%. 43% of respondents applied for bank loans. Moreover, about one-fourth of them (12% of respondents) complained about the tightening of lending conditions, while these terms remain unchanged for the majority of surveyed companies (30%).
The easing of the restrictions in those regions where the epidemiological situation allows this and the gradual adjustment of businesses and households to the new environment not only contributed to the stabilisation over the past week, but also supported a slight increase in economic activity compared to the previous week. Another evidence of this is a partial revival of electric power consumption and a slight rise in financial flows. We have somewhat adjusted the calculation method for these flows and started to release a special publication with related findings. The gap of financial flows with their normal readings shrank by approximately 10 percentage points. Households’ expenses on consumer goods slightly rose over the past week, while remaining relatively low.
Briefly on inflation. Over the week from 7 through 13 April, consumer prices were up by 0.2%, which is below their growth rates over the previous three weeks, but is still in the upper part of the range typical of this week of the year. Annual inflation increased to 2.9%, which is still below the target.
A stabilisation of or even a slight decrease in weekly inflation suggests that the short-term pro-inflationary pressure associated with the weakening of the ruble and a surge in consumer demand in the middle of March is gradually waning.
Inflation expectations have risen. Currently, we do not have opportunities for carrying out surveys in the usual mode since questioners’ personal communication with people should be avoided. However, our telephone inquiry has shown a two-fold increase (from 21% to 43%) in the number of respondents considering that the price growth is high, with nearly 43% of respondents believing that the inflation rate is now significantly higher than at the beginning of the year. In addition, the majority of the respondents are observing a rise in prices only for certain products, specifically for those that have been in great demand. In view of the above, we consider that a rise in inflation expectations is a temporary factor.
I believe that we will be able to thoroughly look into the issue of a key rate reduction already at the next meeting of the Board of Directors. As usual, we will study a whole range of various economic scenarios, and will thus estimate the potential we have for monetary easing and its pace that would be reasonable in this case.
According to up-to-date indicators of banks’ performance, both loans and deposits were generally quite stable last week.
The situation with liquidity coverage remained comfortable, which is why the Bank of Russia held no repo auctions last week. Overall, we expect that the surplus of liquidity will stay at the level of
Now, regarding the monitoring of the progress of the implemented measures.
Preferential 4% refinancing programme for SME loans. Ten banks have signed agreements with the Bank of Russia (as you remember, this number was three last week), and these banks have already started to actually take out these loans.
At the moment, the progress of this programme as regards wage loans to SMEs at the zero interest rate is still weak. Disbursements increased ten-fold compared to previous weeks. However, according to the estimate, demand for this programme among SMEs of the most affected industries should approximate 20 billion rubles monthly. Therefore, the 1.1 billion granted by the moment is certainly a very small amount. Nearly 30% of applications have been approved (the applications received total 11 billion rubles, approvals amount to 3.5 billion rubles). As I have already said, the actual disbursements slightly exceed 1 billion rubles.
We expect that the progress will considerably improve as the number of banks joining the wage loan programme (they are currently numbering 5 against 3 last week) increases and the issue of providing VEB.RF’s guarantees to a wide range of banks is solved. First and foremost, we expect regional banks to join this programme. We also believe it essential to expand the programme to medium-sized enterprises. This will boost the progress.
Next. Restructuring of retail loans. By 15 April, individual borrowers have submitted over 585,000 loan restructuring applications. Compared to the results of the previous monitoring, the share of approvals has substantially increased from 14% to 44%. This accounts for nearly 200,000 loans. About 250,000 requests have been rejected. Another 135,000 applications are still under consideration. Over 80% of the requests have been filed within banks’ in-house restructuring programmes, with approximately 43% of them approved (160,000 applications).
A little less than 100,000 requests have been submitted within the law on the grace period. 38,000 of them have been approved (48% of the applications considered). Moreover, banks have approved 28,000 requests without documents confirming an income reduction. Nearly 80%, or 13,000 of these requests are applications for mortgage loan repayment holidays. As to consumer loans and credit cards, banks have approved about one-half of received restructuring applications (16,000 and 7,000 respectively). Approvals on car loans amounted to as little as 7.4% (slightly more than 1,000 loans). In the majority of cases, applications for loan repayment holidays were rejected because borrowers exceeded maximum loan amounts (more than 68% of the refusals).
Next. Restructuring of loans to small businesses. Over the period from 20 March to 15 April 2020, banks received a little less than 60,000 restructuring applications. Approvals number 22,500 (approximately 75% of the requests considered), and nearly 28,000 of the applications submitted are still under consideration.
Banks have rejected 13% of the requests (7,400 loans), mostly from businesses that are not related to the most affected industries. Another frequent reason for refusals is borrowers’ faulty credit history.
Non-bank financial institutions comply with our recommendations and are operating as normal. As banks, they are also restructuring borrowers’ loans. They have approved 92% of 10,000 applications received. Insurers have adjusted their operations to the restrictions. Specifically, they are currently selling OSAGO (compulsory motor third-party liability insurance) policies without diagnostic certificates. Non-governmental pension funds are properly paying pensions to all their clients numbering nearly 2 million (1.9 million) and have limited face-to-face communication with them as much as possible. Major management companies, accounting for 2 million clients and over 1.1 trillion rubles under management, have completely switched to remote communication with their clients. The settlement and exchange infrastructure is functioning without interruption.
Lastly, I will dwell on the new decisions approved today.
These measures are covered in detail in the press release that will be published after this press conference. The new measures are aiming to expand loan restructuring opportunities for businesses and individuals, include factoring into the SME loan refinancing programme, and ease foreign exchange controls associated with the restrictive and other measures. As regards loan restructuring, the key measure is for the regulatory relaxations related to provisioning for restructured loans to encompass all industries, and not only the most affected sectors, provided that borrowers’ creditworthiness was high before the restrictions were implemented.
One of the measures is directly related to banks. In order to improve their opportunities to raise funds, the base rate of contributions to the deposit insurance system has been reduced from 0.15% to 0.1% until the end of 2020.
A number of the new measures deal with the expansion of opportunities for arranging strictly remote communication with clients and the adjustment of effective rules to the current situation, that is, banks may carry out more operations, including the opening of accounts to SMEs, without clients’ personal presence, and expiring bank cards may be used without their re-issue until 1 July. Finally, yesterday we announced that financial institutions are allowed to work with individuals whose passports have expired.
Thank you. I will now answer your questions.
Q&A for the Media
QUESTION from Interfax:
You have said that the Board of Directors will consider a key rate reduction at its next meeting. What are the other options you are going to discuss? Is a key rate increase still on the agenda? How probable is it that the Bank of Russia raises the key rate and when can this happen?
ELVIRA NABIULLINA:
We believe that the main option we will be discussing is the possibility to cut the key rate. I also think that we will be scrutinising this option with regard to various economic scenarios, including measures that may be taken and a pace of their implementation. It is highly unlikely that the key rate will be raised, but we will be discussing this in detail next week at the Board of Directors’ meeting.
QUESTION from Reuters:
Does the Bank of Russia support the opinion that a reduction in the key rate should be more significant in order to boost Russia’s economy facing a threat of a recession?
ELVIRA NABIULLINA:
As I have just said, we will be looking into this issue next week, including both whether a reduction is reasonable in general and which pace would be optimal to do this. I would like to repeat once again that we have given the signal before that we do see room for monetary easing. We will announce our position following the Board of Directors’ meeting.
QUESTION from Izvestia:
You have said that the Board of Directors will be discussing various scenarios at its next meeting. Which is the oil price you consider to be the most probable?
ELVIRA NABIULLINA:
We will present our forecast next week. As I have said before, this will not be an adjustment, but rather a profound review of our previous forecast since the situation has drastically altered. We are going to analyse an oil price scenario. You can see that the current oil price is below the levels we were taking into account in our previous forecast. Therefore, we will make relevant changes and present information on our baseline forecast. Of course, we are going to be more conservative in terms of the oil price than we used to be.
QUESTION from Kommersant:
What is your forecast regarding savings rates and their movements until the end of the year? Which factors may influence these changes?
ELVIRA NABIULLINA:
At the moment, I will probably be able to answer this question only fundamentally. We do understand that people are using their savings when their incomes are declining, which is definitely affecting savings rates. However, there are also other factors impacting savings rates, including inflation and banks’ interest rates. Today, we can see that deposit rates are sufficiently attractive for saving.
QUESTION from Rossiyskaya Gazeta:
Do you agree with the IMF’s latest forecasts of a slump in the global economy (up to minus 3%) and in Russia’s economy (up to minus 5.5%) in 2020 and their
ELVIRA NABIULLINA:
As you know, there are a lot of uncertainties today and a great number of various scenarios. Some scenarios are more pessimistic than the one presented by the IMF, but there are also more optimistic scenarios. However, the IMF’s scenario is also probable. As to our forecast, we will publish it next week. We are just starting our forecasting round and will be discussing all possible scenarios, after which we will present our view on the baseline scenario.
QUESTION from Vedomosti:
The crisis is seriously affecting banks’ interest income. What is the regulator’s opinion regarding the extent of a decrease in fee income?
ELVIRA NABIULLINA:
That is true, the current situation is significantly impacting banks’ incomes, and we do see that their interest income will also be declining. However, it is difficult now to give any estimates of how seriously it will shrink, but we believe that this reduction may reach up to 20%. Nonetheless, we should take into account that banks receive a considerable part of their fee income from cash management and payment services, and this income directly correlates with economic growth rates. Therefore, we can see not only that this income will be declining, but also that it will recover as the economy revives and economic activity picks up.
QUESTION from TASS Agency:
Given the current situation, is the Bank of Russia considering a scenario involving the necessity to increase banks’ capitalisation? What are the conditions that may require this? Earlier, Accounts Chamber Head Kudrin stated that Russian banks might need capitalisation if the coronavirus-induced crisis lasts for another
ELVIRA NABIULLINA:
We do not expect a large-scale stress for the banking system and a reduction in margin as this happened, for instance, in 2014. Certainly, banks’ revenues will be declining and loan loss provisions will be growing since the quality of assets will be deteriorating, which cannot be otherwise in current conditions. However, the loan restructuring being carried out today will support a great number of borrowers and maintain their creditworthiness in the future. As to loans, provisions will be formed a little later because we have allowed a time lag for banks to create them gradually. Fee income will be shrinking, and we have already said that before. Interest income will also be declining. However, the extent of this reduction cannot be as serious as in relation to margin, for instance in
QUESTION from Banki.ru:
Can the current crisis entail a rise in the frequency of banking licence withdrawals in the next one or two years? What is the number of banks in the risk zone?
ELVIRA NABIULLINA:
Frankly speaking, we do not expect that today’s situation, no matter how hard it is, will materially change the statistics on licence withdrawals. We have done a big job to sanitise the banking system. Banks have earned sufficient capital and liquidity and achieved a good standing by the moment of today’s hard situation. However, a number of incidents may occur, although most probably they will not be the result of the crisis or the spread of the coronavirus pandemic. This may only be associated with the fact that a number of banks have accumulated problems over previous periods and the current situation may reveal them. I would stress once again that we do not expect any changes in these trends in the future.
QUESTION from RIA Novosti:
President Putin has given an order to expand the zero interest rate wage loan programme to medium-sized and large businesses. How does the Bank of Russia estimate the amount of funds required to expand this programme? Does the economy need any additional measures to support lending or restructure large enterprises’ loans? If so, are such measures under discussion?
ELVIRA NABIULLINA:
We have assessed whether it is possible to increase funds needed to implement the wage project. Our preferential 4% programme covers loans both to small and medium-sized enterprises. If the wage loan programme with the zero interest rate encompasses medium-sized businesses, this will cause a nearly twofold increase in funds needed for the programme. We will make additional calculations to estimate funds we will need if we also include large enterprises into the programme.
As to large businesses in general, the Government is currently studying this issue, and we are also participating in this work in relation to systemically important enterprises, monitoring their current standing. However, it varies, which is why companies need case-by-case solutions. Speaking of potential measures, today we have approved one of the measures that should help banks restructure loans, including those granted to large businesses. Specifically, in relation to loans that were of good quality, namely in the 1st or 2nd quality category as of 1 March, we allow loan restructuring without additional provisioning. For such loans, banks are also allowed not to deteriorate assessments of borrowers’ quality basically across all industries and business sizes. Therefore, this measure is also applicable to large enterprises.
QUESTION from RBC:
Does the Bank of Russia support the idea of buying sovereign debt at an acute stage of the crisis and recognising it on its balance sheet, as was suggested by a group of Russian economists, which is actually a quantitative easing programme? Is the Bank of Russia holding a discussion with the Government regarding the purchase of government bonds onto its balance sheet?
QUESTION from Bloomberg:
A large number of economists have suggested an increase in the scale of anti-crisis support measures up to the level of the
ELVIRA NABIULLINA:
Purchases of securities and government bonds by central banks is not a standard measure, but a quantitative easing measure. It is generally taken by countries that have already exhausted all possibilities for implementing standard measures involving close-to-zero or even negative rates and need additional measures to increase inflation, bringing it back to targets. These are economies where inflation is very low. This is not the case for Russia now. Our current key rate is still 6%. We have all opportunities at our disposal to employ standard monetary policy tools.
QUESTION from Komsomolskaya Pravda:
Why not opt for people’s quantitative easing, that is, grant about
ELVIRA NABIULLINA:
Of course, targeted direct aid is one of appropriate measures in such hard conditions. Our Government has been implementing this type of measures, increasing unemployment compensations and providing grants to companies for them to pay salaries to their employees, in order to support people’s incomes, as well as other targeted measures to help families with children. This is absolutely normal, but all this is within the Government’s competence and budget decisions. As to the Bank of Russia’s actions, sometimes they discuss and confuse direct payments with so called helicopter money. Direct payments are exactly what the current situation requires. As to helicopter money as a way to pursue monetary policy and a non-standard method when all possibilities even for targeted quantitative easing have actually been exhausted and when central banks are buying various kinds of bonds—and not only governmental bonds, but even junk bonds, this issue is currently being discussed. However, this method as a monetary policy tool is certainly absolutely irrelevant to us. I would repeat once again that direct payments as a social support element should definitely be made in today’s conditions. As to helicopter money through monetary policy, this is a completely different thing, and there is absolutely no need for it in our situation.
QUESTION from Amur News Service:
What measures will be implemented by the Bank of Russia with regard to a low percentage of banks’ approvals of mortgage and consumer loan restructuring applications?
ELVIRA NABIULLINA:
Many households and businesses are really in a hard situation now when it is difficult for them to repay their loans, which is why they have applied to banks for restructuring even before the relevant law was approved, obliging banks to restructure loans of certain types granted to SMEs and households, consumer loans, and others. We do see that such requests have been growing in number, and we are monitoring the situation on a weekly basis. Every week I provide rather detailed information on the progress of loan restructuring since I believe it to be very important and a really essential social issue. We are tracking the situation with loan restructuring, and the progress here has improved. However, the pace of restructuring varies depending on loans. Banks are also looking into this issue now, and we are continuously communicating with them in order to streamline all processes and to faster approve decisions when there is such a flood of requests. We are doing so to correctly inform clients, which is not always so, and we are also receiving complaints about that. We are providing all necessary information to consumers through our call centres ourselves. I would like to emphasise once again that we will be monitoring the situation and make additional decisions if appropriate. As I have already said, the percentage of approvals on mortgage restructuring applications is rather high, reaching 80%. We assume that the percentage of approvals will also be growing for other types of loans. If needed, we will be implementing additional measures to protect all rights of individual borrowers and ensure the restructuring of loans according to the conditions provided for by law.
QUESTION from The Bell:
Within the programme for preferential lending to SMEs, the Bank of Russia is extending loans to banks at 4%, while at the first stage banks are obliged to issue wage loans at 0%. What is the motivation for banks to join this programme?
ELVIRA NABIULLINA:
Firstly, we are extending loans at 4%. The Government has allocated funds to subsidise this rate within 4%. What should incentivise banks? Their motivation is to help maintain borrowers’ solvency. These are borrowers banks have been working with, and most probably these SMEs have long-term credit histories. Any bank should seek to help borrowers maintain their financial stability and increase their chances to overcome these hardships. I believe that banks’ motivation in this regard is quite obvious in today’s conditions.
QUESTION from Forbes:
A question about the sale of Sberbank’s shares. Why did the Bank of Russia decide to sell its equity stake so urgently and as a single tranche? Why did not you suspend the transaction, and how will minority shareholders benefit from the shareholder agreement instead of a repurchase of shares from them? Would it be true to say that minority shareholders will receive no benefits as a result of this deal?
ELVIRA NABIULLINA:
Firstly, we closed this deal pursuant to law. As a result of the depreciation of the ruble against the US dollar, the National Wealth Fund even received a positive foreign currency revaluation. This is why we were able to consummate the deal at one go, so to say. The shareholder agreement has also been drafted by the Bank of Russia according to law, and this draft has been submitted to the Ministry of Finance for consideration. We expect that the agreement will be executed by 10 May. As to the advantages of this shareholder agreement, including and specifically for minority shareholders, this agreement will stipulate the continuance of Sberbank’s corporate governance and development strategy. Thus, the shareholder agreement is basically an insurance for Sberbank’s minority shareholders against any material changes in Sberbank’s operation. In addition, the shareholder agreement should stipulate an appropriate number of independent directors in Sberbank’s Supervisory Board, and the independent responsibility of government agents in the Supervisory Board for decisions made. I would also like to note that Sberbank’s shares are liquid and are traded in the market. Therefore, minority shareholders can always make use of this opportunity. It is essential to remember that the deal has not replaced the owner. This is the Russian Federation. Therefore, no offer is required in this case according to law. This is the spirit of the law, so to speak, while the absence of an offer is compensated by the conclusion of the shareholder agreement that will guarantee that Sberbank will continue its development strategy.
QUESTION from TASS Agency:
In early April, a range of major banks have considerably increased mortgage down payments. Does the Bank of Russia believe it to be an attempt to limit mortgage lending to households, or consider such measures reasonable on the part of banks?
ELVIRA NABIULLINA:
We do see such cases in individual banks. What I would like to say regarding this issue is that banks generally consider—and this is totally appropriate and reasonable—a down payment as a borrower’s ability to save funds and, accordingly, to service a loan in the future. Of course, banks’ credit risks are currently growing, and banks are looking into different ways to mitigate these risks, opting for higher-quality borrowers. One of the criteria of a higher-quality borrower is the amount of a down payment. This is a market practice, and we did observe that both in 2009 and 2015. Nonetheless, we believe that mortgage lending is not only a critical priority over a short- and even medium-term horizon. We can also see that there are good reasons behind positive trends of mortgage lending growth. Currently, the share of mortgage lending in the economy is rather small, but mortgage lending itself and its development are solving the problem of housing affordability and are also greatly contributing to economic development. In this regard, the measures and decisions to support mortgage lending that President Putin announced yesterday are essential and will support the mortgage market.
QUESTION from Vedomosti:
The Bank of Russia has received four bids for the acquisition of the Asian-Pacific Bank. Can you name the bidders? Will there be an auction or any other format?
ELVIRA NABIULLINA:
We are now examining these bids. Next month, we will present more detailed information on our further actions and on the sale procedure. Of course, we will be taking into account the state of the economy and the epidemiological situation when making this decision. However, it is encouraging to see that interest in this bank does exist. We have really received four bids.
QUESTION from Interfax:
Is the Bank of Russia going to accelerate the implementation of state regulation in banking, given that there is still no self-regulation institute in this industry, with unfair practices still being employed and even expanding in the conditions of the pandemic. Would it be reasonable for banks to join the financial ombudsman institute faster?
ELVIRA NABIULLINA:
That is true: about one year ago we did propose two options to banks for consideration. The first one involves the establishment of a self-regulation institute in banking, which currently does not exist, and therefore, banks are addressing on their own the problem of ensuring fair sales of products to clients, developing and joining standards, and supervising compliance with these standards. If this is not done, we will launch the process through law, since it is inadmissible to violate these standards and continue to use unfair practices in sales of financial products to people. At the moment, we are at the stage where we do need to promote this law faster. We are actually doing this and intend to do our best in order to speed up its approval.
As to the acceleration of the process when banks may join the financial ombudsman institute faster in the current situation—and as you know, banks are already entitled to join this institute voluntarily—pursuant to law, the financial ombudsman institute basically does not provide for mediation in the course of loan restructuring. If we expect that the financial ombudsman would somehow be able to help in loan restructuring, currently the very concept of the law does not imply this. Therefore, even if banks were joining the financial ombudsman institute faster, this would not solve the problem. We will be monitoring the progress of loan restructuring ourselves, and we are actually doing this now. We will be responding to complaints. Our Service for Consumer Protection is already handling this kind of complaints in order to protect borrowers’ rights.
QUESTION from Komsomolskaya Pravda in Saratov:
Recently, the Government has introduced the tax on interest from deposits amounting to
1 million rubles or more, which has induced a short-term bank run. Many people are afraid that the Government will impose a moratorium on deposits prohibiting money withdrawals. Is this technically possible? Can you reassure individuals?
ELVIRA NABIULLINA:
There are no grounds for such concerns. Firstly, this is impossible, whether technically or legally. Neither the Civil Code, nor banking laws allow such restrictions. Secondly, there is absolutely no need in this. The situation with funding and liquidity in the banking system is completely comfortable. At the moment, we have the so called structural surplus of liquidity in the banking sector approximating 2.5 trillion rubles. Moreover, banks have another 7 trillion rubles of market collateral. Thus, banks may always raise funds against this security, whether in the market or from the Bank of Russia. We always provide liquidity in the amount required. Therefore, this is neither needed, nor reasonable, and there is absolutely no rationale for this.
QUESTION from RIA Novosti:
In March, the share of federal government bonds held by non-residents decreased. Moreover, on Wednesday the first auction held after the suspension was declared void. Does the Bank of Russia expect a further shrinkage of non-residents’ share in OFZs? How critical is the withdrawal of foreign investors from government bonds?
ELVIRA NABIULLINA:
First of all, the situation in the OFZ market stabilised at the end of March — beginning of April. The rise in yield that we observed has largely been offset. We can see that non-residents, on the contrary, have resumed their OFZ purchases in April. Foreigners were really selling government bonds approximately from late February to the second half of March. We are now observing that non-residents’ share in the OFZ market is stable. Foreign investors also took part in the recent auction. However, as I have already repeated many times and would like to stress this once again, even if such a withdrawal of non-residents from the OFZ market actually happens, this will not entail any serious consequences because our debt is not very large.
QUESTION from Bloomberg:
Despite the regulatory easing, banks have been reducing lending due to the quarantine restrictions and risk growth. How can you comment on this? What trends in lending do you expect in April and overall in the second quarter?
ELVIRA NABIULLINA:
At the moment, it is really difficult to estimate possible changes in lending amounts. The up-to-date information available to us, primarily the March statistics, show that there was a rise in lending. People were actually taking out mortgage and consumer loans more intensely. They were doing so both to support their consumption and partially due to increased demand for certain types of products and durable goods. Based on the up-to-date and very unreliable statistics for the first days of April, we can see that even if there is a slowdown, it is minor. We will be monitoring further changes and trends. Moreover, the dynamics of lending amounts will also depend on the progress of loan restructuring, since restructured loans will remain on banks’ balance sheets. Therefore, lending growth rates will be really declining, but it is quite likely that lending rates themselves will still stay in the positive zone at the end of the year.
QUESTION from Reuters:
Does the Bank of Russia expect a deficit on Russia’s current account due to the new OPEC+ deal, and a reduction in exports? If so, in which quarter will this most probably happen?
ELVIRA NABIULLINA:
That is true that in certain quarters Russia may have a negative balance on its current account. However, I would like to emphasise that the current account itself is influenced not only by export quantities and the oil price, but also by imports. Therefore, this will largely depend on how imports that have currently declined will be picking up as the economy revives. Speaking of how this may affect financial indicators and the exchange rate, I can say that our exchange rate is still impacted not only by the state of our current account, but also by the state of our financial account and our fiscal rule-based operations in the foreign exchange market.