## Transcript of the Russia 2020 Article IV Consultation Press Briefing

_IMF News, February 9, 2021_

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## Bibliographic details
- Published: February 9, 2021

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### Opening remarks
- Date: February 9, 2021.
- Presenter: Jacques Miniane, Mission Chief for Russia, IMF.
- Overall assessment: The economy "has shown more momentum and resilience than we expected."
- Key numerical observations:
  - "a contraction of 3.1% contraction in 2020," which is "less than the -3.6 percent we projected."
  - Forecast for 2021: "three percent growth."
- Forecast conditionality:
  - Forecast is conditional on "an effective vaccine rollout" and "a substantial part of the adult population being vaccinated by the summer in Russia and in many of Russia's trading partners."
- Cautionary note: "We are not out of the woods" — risks include strict lockdowns in trading partners, new variants, and uncertainties around vaccine rollouts.

### Growth and forecasts
- 2020 outturn vs. projection:
  - Staff projection circulated on January 19 showed "-3.6 percent" for 2020.
  - Supplement acknowledges the actual outturn of "-3.1" for 2020.
- Implications for 2021:
  - Higher-than-projected Q4 2020 (growth instead of contraction) implies 2021 "is going to start from a higher base."
  - Staff view: "there's upside risk" to the 2021 forecast, balanced against downside risks from pandemic developments.

### Fiscal policy and social support
- Authorities' stance: Desire to withdraw fiscal support if the economy continues to grow.
- IMF advice:
  - Urges vigilance and readiness to provide budget support if the economy deteriorates.
  - Specific recommendation: "unemployment benefits are one example" — authorities "decided to extend the maximum benefit" and IMF "would like to see all unemployment benefits kept at their post-March levels for a little while longer."

### Inflation and monetary policy
- Inflation developments:
  - "Inflation has been running stronger than we projected," attributed largely to "one-off effects from global food prices, and one-off effects from the ruble depreciation."
  - Staff view: given weak economy and transitory factors, "inflation was going to start going down after... these one-off effects die off."
- Central bank approach:
  - Executive Directors "generally saw merit in the wait-and-see approach of the central bank."
  - Staff recommendation: there was "room for further easing" but recognition of "inflationary risks."
- Q&A highlights on rates:
  - Question asked about possibility of the Russian Central Bank "cutting rates this Friday" and "cutting rates by 50 basis points in coming months."
  - IMF position summarized: Directors saw merit in either loosening or a wait-and-see approach; "there was no discussion at the Executive Board of raising rates."
  - Mission chief: easing timing expressed as "in the coming months" rather than a specific date.

### Banking sector and financial stability
- Banking sector strength:
  - Banks "entered the crisis in a strong position."
  - "Bank capital for the system is more than sufficient to absorb the losses."
- Policy guidance to regulators:
  - Request to the central bank: continue to ask banks that can set aside capital to do so without waiting until "April or June" (extended time).
  - Recommendation: when the extended time frame expires, "not to renew it," because banks "are in a position to set aside capital and they should."

### Structural reforms and medium-term growth
- Pre-crisis constraints: Russia "entered the crisis with very weak growth" and "real incomes, per capita incomes in Russia are growing very slowly and are not converging to the levels of richer countries."
- Structural bottlenecks to address:
  - "weak infrastructure"
  - "improving the business environment"
  - "improving governance and the rule of law"
- Views on specific initiatives:
  - Regulatory guillotine: welcome, but "it remains to be seen what actual difference it is going to make to the business environment."
  - "13 national projects": considered "very important," but IMF advice is they "should catalyze the private sector" and "should not be used to expand the footprint of the state."

### Q&A highlights
- Forecast updating:
  - Report circulated on January 19; supplement included later acknowledging "-3.1" for 2020 rather than the report's "-3.6 percent."
  - IMF explanation: cannot continuously modify the report before board consideration; supplement records updated outturns.
- Monetary policy timing:
  - Directors "generally see merit in the central bank's approach" and favored wait-and-see given current inflation dynamics.
  - Mission chief's view: "discussion of raising rates at this stage seem premature" due to "significant slack in the economy" and belief that inflation effects are "transient."

*Transcript of the Russia 2020 Article IV Consultation Press Briefing — IMF Communications Department, February 9, 2021.*

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## References

- [Russian Federation and the IMF](http://www.imf.org/external/country/RUS/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Transcripts](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2021/02/09/tr020921-transcript-of-the-2020-article-iv-consultation-on-russia-press-briefing_