Page 5 - RusRPTJul20

that the CBR put through another 100bp rate cut to 4.5% -- its lowest level ever, that could help boost growth.
Helping has been the recovery of oil back into the Ministry of Finance “comfort zone” ​where Russia Inc is almost breaking even again. The price of a barrel of Urals-grade crude oil has risen over the past month from just over $30 to around $40. The price has now recovered to levels similar to early March, but still is about 40% below the price at the start of the year.
Higher oil prices are reflected in the ruble’s exchange rate. Although the ruble has appreciated roughly 5% against the dollar and about 1% against the euro over the past month, the ruble-dollar and ruble-euro rates are still about 12% weaker than they were at the start of the year.
With the coronacrisis in retreat the government is revving up to support the economy with more spending​ worth some 5% of GDP. However, the Kremlin is remaining very cautious and has preferred to reallocate budget funds to support the economy rather than tap into the National Welfare Fund (NWF) for fresh cash. There are also a significant number of tax holidays and state guaranteed loans that are also being used as support measures.
According to Prime Minister Mishustin, the recovery plan includes about 500 different measures and its price tag for 2020-2021 totals about RUB5 trillion (about 5% of GDP).
The government has a lot of financial firepower in reserve. The Russian Ministry of Finance ruble-denominated OFZ treasury bills has become one of the most popular debt markets in the world and the Ministry intends to double its borrowing this year with RUB4 trillion of issues.
5​ RUSSIA Country Report​ July 2020 ​ ​www.intellinews.com