IMF Staff Concludes Visit to Russian Federation
IMF News, November 29, 2016
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- Published: November 29, 2016
Economic outlook and key projections
- Russia’s economy has absorbed the dual shocks from oil and sanctions but will still contract by 0.6 percent this year.
- The recovery should be on a stronger footing in 2017, with the economy forecasted to expand by 1.1 percent.
- Inflation has continued to decelerate and is projected to decline to 5.6 percent at end-2016, and to fall further towards the central bank’s inflation target over the course of next year.
- The current account surplus is forecasted to narrow as the recovery of imports outpaces the increase in export receipts, in part because non-traditional exports have yet to benefit from the ruble depreciation.
Fiscal policy assessment and recommendations
- The authorities are embarking on a necessary and ambitious medium-term fiscal consolidation program to adjust to permanently lower oil prices.
- The reestablishment of the three-year fiscal framework is welcome and will help anchor expectations.
- To sustain the significant adjustment, fiscal consolidation should rely on:
- better targeted and more permanent structural reforms to the pension system,
- reform of tax exemptions,
- reduction of subsidies,
- while protecting public and human capital investment.
- Enactment of a revised fiscal oil price rule would help reduce policy uncertainty and cement the fiscal adjustment.
Monetary policy outlook
- The expected fiscal consolidation and the subdued nature of the recovery are putting in place conditions for the central bank to resume, in due course, monetary policy easing in a manner consistent with the 4 percent inflation target.
- 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.
Financial sector reforms
- The authorities are preparing changes to the bank resolution framework, which include:
- the creation of a bank resolution fund,
- introduction of statutory bail-in.
- IMF staff look forward to analyzing the planned reforms and further discussing these issues with the authorities, including during the annual Article IV mission expected to take place in May 2017.
Mission details and contact
- An IMF mission led by Ernesto Ramirez Rigo visited Moscow during November 14–18, 2016.
- Press officer: Wiktor Krzyzanowski; Phone: +1 202 623-7100; Email: MEDIA@IMF.org
IMF Staff Concludes Visit to Russian Federation — Press Release No. 16/529, November 29, 2016.