Page 54 - RusRPTMay20

assets of the private sector. The positive balance of financial operations of the private sector in January-March 2020 amounted to $17.0bn ($24.0bn a year earlier). At the same time, unlike the situation a year earlier, other sectors in the past quarter reduced their liabilities to non-residents and significantly reduced the placement of financial assets abroad,” the CBR said.
While there has been some selling of the Russian Ministry of Finance ruble-denominated OFZ treasury bills in the last month foreign investors still hold just over a third (34.9% as of the end of March) of the outstanding bonds, or RUB3,185bn ($43.4bn).
In 1Q20, net capital outflow from Russia totalled $17bn – down 29% y/y. In the same period, the CBR recorded a $1.2bn inflow of foreign money into the OFZ market. Speaking at a weekly press conference on April 10, CBR governor Elvira Nabiullina said the bank sees stabilization in foreign ownership of OFZ bonds – over the past week, the share did not change from 30-31%, according to BCS GM.
Nabiullina also hinted that the CBR may cut rates again this year to support growth in response to the stop-shock caused by the coronavirus (COVID-19) pandemic. She said that while the current inflation trend is moving up, albeit from historic lows of 2.3% in March, the CBR expects deflationary pressures will take the lead in the second half of this year due to the economic slowdown associated with the urban lockdowns in the second quarter. The overall consumer price inflation (CPI) rate starting to move downwards, according to the CBR. Nabiullina added that this could open the door for a continuation of monetary easing by the bank.
“Macro data will become worse, but current account] surplus will remain. The balance of payments (BoP) data should be treated as purely historical – the macro situation in Russia and the world will inevitably change quite dramatically for the worse in 2Q20 and beyond,” says ​BSC Global Markets chief economist Vladimir Tikhomirov. “This, however, is unlikely to lead to a deficit in Russia’s external accounts – a large drop in exports volumes will be compensated by an even larger decline in the volumes of imports, which will allow Russia to maintain double surpluses. We forecast that in 2020, c/a will be closed with a surplus of $45bn (-30% y/y), while the trade surplus will stand at $103bn (-38% y/y).”
5.2.1 ​Import/export dynamics
Russia has stopped grain exports outside the Eurasian Economic Union (EAEU) until July 1 ​after exporters used the entire 7mn tonne non-tariff grain export quota, the Agriculture Ministry said in a statement on April 26. On March 31, the Russian government introduced an export quota of 7mn tonnes on exports of wheat, rye, barley, and corn to the countries outside the EAEU until June 30. According to the ministry, Russian exporters used the entire quota as of April 26. The ministry said earlier that Russia exported 36.1mn tonnes of grain from the start of the current agricultural year on July 1, 2019 through April 16, 2020, a 6.7% fall on the year. Russia’s grain exports amounted to 43.3mn tonnes, including 35.2mn tonnes of wheat, from July 1, 2018 through June 30, 2019.
54​ RUSSIA Country Report​ May 2020 ​ ​www.intellinews.com