Page 10 - RusRPTSept22

2.0 Politics
2.1 The CBR publishes a gloomy monetary policy outlook
The Central Bank of Russia (CBR) published a gloomy monetary policy outlook at the start of August and financial market development plan drafts for the years 2023–25 that says the task of monetary policy and financial markets is to support the economy's adaptation to a more difficult economic operating environment.
The most important goals are to keep inflation moderate (4%), channel funding to key investments and reduce the financial system's dependence on the so-called unfriendly countries.
In order to support investments, the central bank estimates that it can introduce various regulatory and other measures. However, a taxonomy must be drawn up for all public sector support measures, which defines the criteria for investment projects that promote technological sovereignty and economic modernization that are eligible for support.
In addition, household savings should be channelled more efficiently to finance investments, e.g. by increasing pension savings and expanding the investment opportunities of pension funds and by expanding the supply of company shares and bonds directly to individuals.
In order to curb the vulnerability of the financial system, the central bank proposes regulatory measures to reduce the use of currencies of countries considered unfriendly in the banking sector and as contractual currency.
In the future, the restrictions on capital movements will only be aimed at countries considered unfriendly. Efforts are being made to promote international payment traffic in other currencies. In the financial sector, the use of domestic credit ratings and software must be increased, for example. The Central Bank also states that it does not intend to redeem the assets of Russian financial institutions frozen abroad.
In the central bank's basic forecast, Russia's GDP is expected to shrink by a total of 5–10% this year and next year and to return to moderate growth of 1.5–2.5% in 2024–25.
Private consumption is expected to decrease by 5–10% and investments by 4–12% during the years 2022–23.
The central bank estimates a 20–30% drop in exports and 25–35% in imports.
The Central Bank has also drawn up a more favourable scenario, in which the Russian economy adapts to a more difficult operating environment better than expected, and a more gloomy scenario, in which the world economy develops
10 RUSSIA Country Report September 2022 www.intellinews.com