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August 24, 2018 www.intellinews.com I Page 4
In July, the Finance Ministry expected to receive RUB387bn of oil revenues, while as of June the actual oil and gas revenues turned out to be lower than those forecasted by RUB39.6bn.
As a result in the period from June 6 to August 6, the Ministry of Finance sent RUB347.7bn for the purchase of currency, or about RUB15.8bn daily for these purposes.
Prior to this, from June 7 to July 5, the Ministry of Finance planned to buy record amounts of curren- cy at RUB380bn – RUB19bn a day – the highest in the history of interventions. In July, purchases will decrease in general by 8%, and daily interventions by 17%. Now they are going to stop altogether.
The Ministry of Finance started buying currency on the domestic market as part of the budget rule in February 2017 to stabilize the ruble exchange rate and reduce the dependence of the Russian economy on hydrocarbons.
In the meantime the government is also taking the recent sanction shakedown into consideration and said it will present revised economic targets next week.
Sanction pressure peaked at the end of August, with the US stepping up some existing sanctions. And The US government has threatened to impose “crushing” sanctions in Russia this autumn with
a bi-partisan sanctions bill that was introduced to the US Congress, as well as the UK's top diplomat Jeremy Hunt this week calling on the European Union to toughen its stance in response to the poisoning of a former Russian spy on British soil last year.
A weaker ruble and lower grain harvest forecast might lead to revised inflation target for this year, the Minister of Economic Development Maxim Oreshkin said on August 22. Currently inflation at record post-Soviet low of 2.5% and to finish this year at an all time annual low of 3.1% for 2018 be- fore rising modestly to 4.3% in 2019 – on par with the CBR’s target rate. The producer price index
of inflation (PPI) has been driven higher in recent months by rising petrol prices, amongst other things, and is currently at 16.6% for July.
Updated forecasts to be presented by Oreshkin next week will show a smaller expected GDP growth for 2018. Previously his ministry already warned of an imminent slowdown in 2019 due to planned VAT rate hike.
Unnamed government officials told Bloomberg
on August 23 that danger of US sanctions and a succession of crises across emerging markets are not only hurting the currency, but also fuel inten- sified outflows of capital. In June the CBR said capital outflow could rise to $30bn in 2018 from previously expected $19bn.