An International Monetary Fund (IMF) mission led by Ernesto Ramirez Rigo visited Moscow during November 14–18, 2016, to discuss the economic outlook
and related policies. At the conclusion of the visit, Mr. Ramirez Rigo made the following statement:
“The economy has absorbed the dual shocks from oil and sanctions, and there are signs of a nascent turnaround, although economic activity will still
contract by 0.6 percent this year. The recovery should be on a stronger footing in 2017, with the economy forecasted to expand by 1.1 percent due in part
to higher oil prices. Inflation has continued to decelerate and is now projected to decline to 5.6 percent at end-2016, and to fall further towards the
central bank’s inflation target over the course of next year. The current account surplus is forecasted to narrow as the recovery of imports outpaces the
increase in export receipts, in part because non-traditional exports have yet to benefit from the ruble depreciation.
“The authorities are embarking on a necessary and ambitious medium-term fiscal consolidation program to adjust to permanently lower oil prices. The
reestablishment of the three-year fiscal framework is welcome and will help anchor expectations. However, to sustain the significant adjustment, fiscal
consolidation should rely on better targeted and more permanent structural reforms to the pension system, tax exemptions, and subsidies, while protecting
public and human capital investment. Finally, the enactment of a revised fiscal oil price rule would help reduce policy uncertainty and cement the fiscal
adjustment.
“The expected fiscal consolidation and the subdued nature of the recovery are putting in place the conditions for the central bank to resume, in due
course, monetary policy easing in a manner consistent with the 4 percent inflation target. However, the pace of easing should take into account the
presence of external risks and the need to build credibility under the newly introduced inflation targeting regime.
“The authorities are preparing changes to the bank resolution framework, which include the creation of a bank resolution fund and introduction of statutory
bail-in. Staff looks forward to analyzing the planned reforms and to further discussing these issues with the authorities, including during the annual
Article IV mission expected to take place in May 2017.”
