{
  "title": "Press Release: IMF Executive Board Concludes 2015 Article IV Consultation with the Russian Federation",
  "publication": "IMF News, August 3, 2015",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr15368",
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  "summary": "Russia entered 2014 with declining potential growth owing to the stabilization of oil prices, stalled structural reforms, weak investment, declining total factor productivity and adverse population dynamics.",
  "publishDate": "2015-08-03",
  "sections": [
    {
      "heading": "Context and recent developments",
      "content": "- Russia entered 2014 with declining potential growth owing to the stabilization of oil prices, stalled structural reforms, weak investment, declining total factor productivity and adverse population dynamics.\n- The ongoing slowdown was exacerbated by the dual external shocks from the sharp decline in oil prices and sanctions.\n- Authorities' stabilizing measures included:\n  - Accelerating the move to a floating exchange rate, raising policy rates and increasing FX liquidity.\n  - Introducing temporary regulatory forbearance and a capital support program.\n  - Providing some fiscal stimulus and limited wage indexation to support the disinflationary process."
    },
    {
      "heading": "Economic outlook and projections",
      "content": "- 2015 is expected to be a recession year due to the sharp drop in oil prices and sanctions.\n  - GDP is expected to decline by 3.4 percent driven by a contraction in domestic demand weighed down by falling real wages, higher cost of capital, and weakened confidence.\n  - Inflation is expected to come down due to the dissipating impact of the ruble depreciation, the limited wage indexation in the budget and the recession.\n  - Growth should resume in 2016 while inflation continues to decline.\n  - Medium-term growth is projected at 1.5 percent per year, with a weak recovery as limiting factors behind decelerating potential growth take time to be addressed.\n  - An increase in geopolitical tensions is identified as the main risk to the outlook."
    },
    {
      "heading": "Executive Board assessment and policy recommendations",
      "content": "- Directors commended policy actions to stabilize the economy and noted pre-existing structural weaknesses.\n- Fiscal policy:\n  - A supportive fiscal stance is appropriate at present given cyclical considerations and available fiscal space.\n  - Quasi-fiscal operations should be limited and coordinated to avoid an overly stimulative impulse.\n  - For the medium term, Directors called for a gradual fiscal tightening to adjust to lower oil prices and rebuild buffers.\n  - Directors welcomed the intention to revisit the fiscal rule so that the oil price benchmark better reflects market developments.\n  - Need for permanent and credible fiscal measures, including:\n    - Pension reform.\n    - Reduction of energy subsidies.\n    - Better targeting of social transfers.\n- Monetary policy:\n  - Monetary easing should continue at a pace commensurate with the decline in underlying inflation and inflation expectations as external and financial stability risks abate.\n  - Directors encouraged that the foreign exchange purchase program to rebuild precautionary buffers be consistent with inflation targeting.\n- Financial sector:\n  - Policies have been successful in stabilizing the banking system.\n  - Support should be targeted to individual banks according to specific capital needs.\n  - Adjust parameters of the capital support program to strengthen incentives and minimize public sector cost.\n  - Phase-out regulatory forbearance along with implementation of the capital support program.\n  - Better align Russia’s resolution framework to best international practices.\n  - Reduce banking sector fragmentation and encourage competition by stepping up supervision and moving toward adoption of Basel III capital standards.\n- Structural reforms:\n  - Accelerating structural reforms is key to raising potential growth.\n  - Priority measures should include:\n    - Strengthening governance and property rights.\n    - Streamlining regulation.\n    - Reducing trade barriers.\n    - Improving transparency and efficiency of public investment.\n    - Increasing competition in domestic markets.\n    - Reinvigorating the privatization agenda as market conditions permit.\n    - Deepening and improving efficiency of the financial system to boost capital allocation and potential growth."
    },
    {
      "heading": "Selected macroeconomic indicators, 2012–16 (annual percent change unless indicated)",
      "content": "- Production and prices:\n  - Real GDP: 2012: 3.4; 2013: 1.3; 2014: 0.6; 2015: -3.4; 2016: 0.2\n  - Consumer prices (period average): 2012: 5.1; 2013: 6.8; 2014: 7.8; 2015: 15.6; 2016: 7.5\n  - Consumer prices (end of period): 2012: 6.6; 2013: 6.5; 2014: 11.4; 2015: 12.5\n  - GDP deflator: 2012: 7.4; 2013: 7.2; 2014: 8.8\n- Public sector (Percent of GDP):\n  - General government net lending/borrowing (overall balance): 2012: 0.4; 2013: -1.3; 2014: -1.2; 2015: -4.8; 2016: -4.2\n  - Revenue: 2012: 37.7; 2013: 36.9; 2014: 37.5; 2015: 35.0; 2016: 35.3\n  - Expenditures: 2012: 37.3; 2013: 38.2; 2014: 38.7; 2015: 39.8; 2016: 39.5\n  - Primary balance: 2012: 1.0; 2013: -0.6; 2014: -0.4; 2015: -3.8; 2016: -3.0\n  - Nonoil balance: 2012: -10.8; 2013: -12.0; 2014: -12.6; 2015: -13.3; 2016: -13.0\n  - Federal government: 2012: -0.1; 2013: -0.5; 2014: -3.3; 2015: -3.9\n  - Additional federal items: 2012: -10.6; 2013: -10.5; 2014: -11.0; 2015: -11.3\n- Money:\n  - Base money: 2012: 11.3; 2013: 8.0; 2014: 6.3; 2015: 2.3; 2016: 6.4\n  - Ruble broad money: 2012: 11.9; 2013: 14.6; 2014: 2.2; 2015: 3.3; 2016: 8.6\n- External sector:\n  - Export volumes: 2012: 2.9; 2013: 2.0; 2014: 0.1; 2015: 4.6; 2016: 2.7\n  - Oil export volumes: 2012: 2.4; 2013: -1.0\n  - Gas export volumes: 2012: -5.8; 2013: 9.9; 2014: 0.8; 2015: 1.6\n  - Non-energy export volumes: 2012: 5.6; 2013: 5.7; 2014: 7.6; 2015: 7.0\n  - Import volumes: 2012: 8.3; 2013: 3.5; 2014: -7.2; 2015: -21.8; 2016: 0.0\n- Levels (Billions of U.S. dollars unless otherwise indicated):\n  - Total merchandise exports, fob: 2012: 527.4; 2013: 523.3; 2014: 497.8; 2015: 374.6; 2016: 404.9\n  - Total merchandise imports, fob: 2012: -335.8; 2013: -341.3; 2014: -308.0; 2015: -230.0; 2016: -230.5\n  - External current account: 2012: 71.3; 2013: 34.1; 2014: 59.5; 2015: 60.8; 2016: 78.5\n  - External current account (in percent of GDP): 2012: 3.2; 2013: 4.5; 2014: 5.5\n  - Gross international reserves (Billions of U.S. dollars): 2012: 537.6; 2013: 509.6; 2014: 405.2; 2015: 362.4; 2016: 374.8\n  - Months of imports: 2012: 14.5; 2013: 13.0; 2014: 13.6\n  - Percent of short-term debt: 2012: 257; 2013: 251; 2014: 320; 2015: 496; 2016: 281\n- Memorandum items:\n  - Nominal GDP (billions of U.S.D): 2012: 2,016; 2013: 2,079; 2014: 1,861; 2015: 1,337; 2016: 1,433\n  - Exchange rate (rubles per U.S.D., period average): 2012: 30.8; 2013: 31.8; 2014: 38.4; 2015: …\n  - World oil price (U.S.D. per barrel): 2012: 112.0; 2013: 108.8; 2014: 98.9; 2015: 61.5; 2016: 67.2\n  - Real effective exchange rate (average percent change): 2012: 1.5; 2013: 1.8; 2014: -8.5\n\nIMF Communications Department; Press Release No. 15/368; August 3, 2015. Executive Board summary transmitted to the Russian authorities.\n\n---\n\n Content in this bundle\n\n- Pr15368rpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Russian Federation and the IMF\n- United States and the IMF\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr15368"
    }
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    "Published: August 3, 2015",
    "Russia entered 2014 with declining potential growth owing to the stabilization of oil prices, stalled structural reforms, weak investment, declining total factor productivity and adverse population dynamics.",
    "The ongoing slowdown was exacerbated by the dual external shocks from the sharp decline in oil prices and sanctions.",
    "Authorities' stabilizing measures included:",
    "2015 is expected to be a recession year due to the sharp drop in oil prices and sanctions.",
    "Directors commended policy actions to stabilize the economy and noted pre-existing structural weaknesses.",
    "Fiscal policy:",
    "Monetary policy:",
    "Financial sector:",
    "Structural reforms:",
    "Production and prices:",
    "Public sector (Percent of GDP):",
    "Money:",
    "External sector:",
    "Levels (Billions of U.S. dollars unless otherwise indicated):",
    "Memorandum items:",
    "[Pr15368rpdf (PDF)](/-/media/websites/imf/imported/external/russian/np/sec/pr/2015/pr15368rpdf.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[Russian Federation and the IMF](http://www.imf.org/external/country/RUS/index.htm)",
    "[United States and the IMF](http://www.imf.org/external/country/USA/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](https://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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