Page 96 - RusRPTDec22

only going to “test the market” this year by placing OFZs worth several tens ofbns.
“A possible storm is expected in the global economy, which in one way or another could affect the Russian economy, so it makes sense to attract liquidity now, while conditions are developing in a favourable way,” the source of Vedomosti specified.
The second reason for the activity of the Ministry of Finance in the debt market is the inefficient use of the National Welfare Fund (NWF) to finance the budget deficit, the interlocutors say. From the point of view of macroeconomic stability, it is better to place OFZs than to take money from the NWF, which in the conditions of its blocking means, in fact, a “quasi-issuance”, one of the sources said.
The issuance of public debt "puts pressure on the money supply" to a lesser extent, since it changes the structure of credit in the economy rather than its overall size, he explained.
Initially, the Ministry of Finance planned to borrow about RUB3.3 trillion s in 2022, but in early February, due to increased market volatility, it suspended OFZ auctions.
In early April, Finance Minister Anton Siluanov said that the ministry no longer plans to enter the borrowing market this year. But already in July it became known that the Ministry of Finance was going to resume auctions in the III quarter (Vedomosti wrote about this on July 20).
Sources then called testing the market a key task. According to the interlocutors, it was planned to reach “normal” borrowing volumes only from 2023. As a result, the Ministry of Finance returned to the public debt market on September 14, but then paused again until October 19.
To date, the ministry has attracted RUB1.4 trillion s in the fourth quarter with a plan of RUB150bn s, i.e., almost 10 times more.
The record placement took place on November 16: during three auctions, the department borrowed RUB823bn s. with an aggregate demand of RUB1.2 trillion s. Since the beginning of the year, the volume of borrowings of the Ministry of Finance has already exceeded RUB1.5 trillion s.
Budget revenues in 2022 may be lower than the planned 27.7 trillion rubles, agrees Mikhail Vasiliev , chief analyst at Sovcombank . Oil and gas revenues may decline due to a further decline in oil prices or a possible reduction in exports after the imposition of a European embargo and a ceiling on Russian oil prices from December 5, he explained: in this scenario, non-oil and gas
96 RUSSIA Country Report December 2022 www.intellinews.com