IMF mission believes it is essential for Russia to maintain stable macroeconomic basis

Following its visit to Moscow, the mission of the International Monetary Fund (IMF) emphasises in its statement that it is critical for Russia to preserve a stable macroeconomic basis — it forms a favourable environment for economic activity by reducing uncertainties, keeping inflation in check and promoting confidence in the ruble.

However, IMF experts project that in the mid-run economic growth will not exceed 2% due to entrenched structural problems and adverse external conditions. According to forecasts, inflation will remain subdued in 2020 H1 and will then return to its 4% target as internal demand picks up and temporary disinflationary factors dissipate. In view of the above, the IMF believes that the key rate reduction by the Bank of Russia beginning in June 2019 was an adequate response to the weakening of inflationary pressure.

In the opinion of IMF experts, the strategy pursued by the Bank of Russia to sanitise the banking sector has proved to be efficient, and the banking sector is stable and has a sufficiently high level of liquidity and capital adequacy. The IMF also stressed that the Bank of Russia should have a proper range of macroprudential regulation instruments to be able to limit risks to financial stability. In particular, IMF experts consider it possible for the Bank of Russia to be vested with legislative powers to impose severe restrictions on lending depending on an individual’s loan to collateral value ratio and debt burden.

On 13–20 November 2019, the IMF mission held a number of meetings in Moscow and Kaluga with representatives of the Bank of Russia and several Russian agencies within the consultations under Article IV of the IMF’s Articles of Agreement.

The full text of the final statement is available on the IMF website.

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21.11.2019 00.00.00