At SPIEF, ministers spoke about Russia’s financial prospects: the economy needs resuscitation

“When the Minister of Finance is silent, this is the worst thing”

The official first day of the St. Petersburg International Economic Forum was marked by heated financial discussions. The tone for them was traditionally set by the leaders of the government’s financial and economic bloc. Nabiullina, Reshetnikov, Siluanov, Oreshkin and other dignitaries from high tribunes told SPIEF participants, guests and spectators about how the domestic economy feels in the face of geopolitical turbulence and where it needs to grow. For almost an hour and a half, the participants of the key panel session listened to an entertaining story about the restructuring of the economy, the high adaptability of domestic business, and exports that survived despite the sanctions. But through all these blissful pictures, in the end, a not very pleasant truth came through: our economy needs resuscitation.

The key economic session of the SPIEF started on a positive note. Minister of Finance Anton Siluanov, head of the Bank of Russia Elvira Nabiullina, aide to the President of Russia Maxim Oreshkin and Minister of Economic Development Maxim Reshetnikov took the floor in succession. If we briefly state the theses of the speakers, then everything is fine in the financial sector. Not great, but quite digestible, given all the geopolitical upheavals.

At the very beginning of the discussion, the head of the Central Bank was reminded of various scenarios for the development of the economy, previously prepared by the Bank of Russia itself. For example, one of them was the “global crisis”. The plan included: the fragmentation of the world economy, the growing threat to financial stability and other factors that could lead to a systemic collapse. According to Nabiullina, the forecasts did not fully come true: “The global economic crisis did not materialize. It’s a mix of scenarios. The Russian economy was developing according to the accelerated adaptation scenario. Russia was able to quickly adapt to the situation.”

Maxim Reshetnikov confirmed that there were big fears after last year’s sanctions attack. This was especially true for Russian exports. But the disaster did not happen. “World markets have proven to be very flexible. Russian exports are developing, the minister said. – Somewhere something is missing – yes, but this year Russian business has done a lot to adapt.

Then the floor was given to Anton Siluanov, who did not immediately decide where to start his speech. “When the Minister of Finance is silent, this is the worst thing,” he said with a grin and continued. – All the pessimists have left. There are only optimists left. The world is changing”.

It is clear that viewers and listeners are more interested not in the coincidence of the positions of the first persons, but in the disagreements between them. They got it too. The main topic of the key economic session of the SPIEF was the structural transformation of the economy. And then the leaders of the financial bloc argued about the need for large-scale infusions of money into the economy.

Maxim Reshetnikov noted that the Russian economy is working quite adequately, despite all the difficulties. “It is responding to demand growth with a structural offer,” he said. But what made it possible and successful? “We have maintained economic stability by providing sufficient financial oxygen to the economy. This helped during the pandemic and last year,” the minister recalled.

According to the chairman of the Central Bank Elvira Nabiullina, in the case of Russia, the restructuring of the economy is a change in the ratio of sectors of the economy. The head of the Bank of Russia said that this is happening much faster than everyone expected. But if Maxim Reshetnikov believes that this was possible due to financial injections, then Nabiullina does not agree with this. “The structural restructuring of the economy did not take place at the expense of budget spending,” she specified. Here the face of Minister of Finance Siluanov lit up with a happy smile.

According to the head of the Central Bank, the private sector should decide what funds to send where. If budget spending increases on a large scale, then it is easier for companies to achieve benefits, rather than fight for competition and labor productivity. On this issue, Anton Siluanov is more in solidarity with the head of the Central Bank. “The business confidence index has risen despite all the turbulence. Business wants to work,” he said.

The participants in the discussions could not ignore the topic of privatization, which has been topical lately due to the growing budget deficit. The head of the Central Bank said that this does not contradict the strategic objectives: “I believe that, of course, it is necessary to privatize. And we have something to privatize without prejudice to strategic interests.” Following Nabiullina, two more high-ranking representatives of the Russian economic cohort expressed their opinion. Both Oreshkin and Reshetnikov also have nothing against privatization, although with reservations.

As for the most urgent – the growth of incomes and living standards of the population – these topics were not included in the agenda of the session. It remains to be hoped that President Putin will speak on these topics on Friday, June 16, in his speech at the forum.