Central Bank: the total volume of preferential loans in Russia has reached 11 trillion rubles

The total volume of loans at a subsidized rate in the country amounted to 11 trillion rubles. The indicator exceeds 14% of the loan portfolio and 7% of GDP, the Bank of Russia reported in project The main directions of the unified state monetary policy for 2024-2026.

The regulator noted that with a significant increase in the volume of preferential lending, it is necessary to assess the overall consequences for the Russian economy, as well as for the country’s budgetary and monetary policy. As part of fiscal policy, lending at subsidized rates helps locally stimulate demand, which in the future can exceed budget expenditures several times, the document notes.

“However, such subsidies are effective only when the program is valid for a limited time and applies only to short-term loans <...>. The Bank of Russia does not consider preferential lending programs as an effective mechanism for long-term support of the national economy as a whole,” the regulator explained.

The draft Guidelines for the Unified State Monetary Policy also provides a forecast of changes in the growth of the Russian economy in 2024 and 2025. The Central Bank expects growth to be more moderate than in 2023, as the country’s economy has almost overcome the recovery phase. In 2026, the economy may return to balanced growth within the range of 1.5% – 2.5%.

Inflation next year will approach 4% and will be fixed at this level in the future, but this will require prolonged tight monetary policy, the regulator added. According to the forecast of the Bank of Russia, the average annual value of the key rate in 2024 will be 11.5% – 12.5%, and in 2025 the figure may drop to 7% – 8% per annum. In 2026, the key rate will reach an average level of 5.5% – 6.5%, according to the Central Bank document.

Earlier, the Bank of Russia announced a possible expansion of macroprudential limits on mortgages. For this, the regulator will require appropriate permissions from the government. The Central Bank, together with the State Duma and other departments, plans to work to obtain them.