What was discussed at the Moscow Financial Forum

At the Moscow Financial Forum held on Thursday, September 28, the authorities continued to seek a balance in financial and economic policy in the current conditions – both from the point of view of the ambiguity of the reorientation of the Russian economy towards eastern markets, and from the point of view of currency regulation and lending. Attempts to find a compromise between stimulating the economy and fiscal consolidation were also made at the regional level – in terms of balancing the debt burden of the constituent entities of the Russian Federation and the need to maintain government spending on their development.

The main theme of the Moscow Financial Forum, which was held in Manege on Thursday, was stated as follows: “In search of a new balance: the Russian financial and economic system in a period of global transformation.” The assistant to the president outlined the outer outline of this work at the plenary discussion Maxim Oreshkin, talking about “structural reform to switch the Russian economy from the sick part of the world economy to the healthy one.” This work, according to him, is still ongoing and in itself is quite painful, but it allows us to “be more sustainable” and solve problems, in particular, with technological re-equipment.

The mayor of Moscow somewhat tempered his optimistic mood Sergei Sobyaninnoting that the sanctions are based on the fact that Russia does not produce key technologies and has now switched from European markets to eastern ones, which are “even tougher” due to preferences for its own producers.

“Nobody wants to give us technology – moreover, they openly tell us: if you want to get some technology, buy the whole product,” explained the mayor of Moscow and added that sometimes a double price becomes a condition for the sale of components.

The head of the Central Bank moved the discussion into a macroeconomic direction Elvira Nabiullina, noting that sometimes opinions are heard that “for structural adjustment, macroeconomic stability can be tactically sacrificed, that it has already played its role.” In her opinion, this approach is wrong – “vulnerabilities have not gone away”, and responsible financial policies are necessary. In this part, the discussion of the ruble exchange rate and the inflation associated with it through import prices was indicative. The head of the Ministry of Economy, Maxim Reshetnikov, developed in this context previously expressed ideas on the transformation and complication of the currency regulation system, for example, control of transfers and analysis of the ruble supply abroad. The minister explained his position by saying that the effect of the return of proceeds is largely offset by the fact that with an increase in the share of payments in national currencies, the share of funds returned by exporters in rubles also increases – the share of rubles in payments for exports in July was estimated at 41%, and for imports – at 30%. Elvira Nabiullina, however, expectedly disagreed with this approach: “I am against taking measures just to show that we have done something with the course – we need to see how effective it is.” The head of the Ministry of Finance also did not support the ideas of the Ministry of Economy.

According to Maxim Oreshkin, the decision of the Ministry of Finance to reduce the borrowing program this year by about 1 trillion rubles (he, however, did not explain the mechanism) may partially influence the foreign exchange market (by reducing the demand for foreign currency). The head of the Ministry of Finance Anton Siluanov presented the decision as a response to the reluctance of banks to “give money at normal rates” in anticipation of an increase in OFZ yields. “Let them now sit and lend to the economy, not the budget,” the minister explained. At the head of VTB Andrey Kostin this, however, caused some bewilderment: “The point of the Central Bank’s policy is for us to reduce lending, but they tell us: give more. So are we going to build a pyramid?”

Separately, the discussion participants also discussed the discrepancies in the forecasts of the Ministry of Economy and the Central Bank – however, this phenomenon was considered natural given the different purposes of the calculations: the first forecast is related to the revenue side of the budget, while the Central Bank’s forecast affects the implementation of monetary policy. At the same time, Elvira Nabiullina repeated that a softer budget policy will require a tougher one from the Central Bank (although a high rate now does not have the same effect as with a completely open capital account).

The search for balance at the forum also took place at the regional level – between increasing the debt burden and the territories’ attempts to protect their own development costs.

Thus, at the specialized session of the forum, the prospects for reinvesting infrastructure budget loans (IBK), as well as increasing the efficiency of their allocation, were discussed. Deputy Mayor of Moscow for economic policy and property and land relations Vladimir Efimov proposed to reinvest funds on the terms of co-financing – an important condition is the direction of money “for development, and not for consumption,” he added. Governor of the Chelyabinsk region Alexey Teksler stated that “the topic of reinvestment is our dream,” and noted that it is the conventional loans, which account for two-thirds of the load, that are problematic, not the infrastructure ones.

The Ministry of Finance is concerned about the growing debt burden of the regions (including indirect ones – within the framework of concession agreements) and the approaching peak of loan repayment in 2025: “Not in all projects we see that the tax effect and economic potential were formed thanks to the selected projects – we need to be honest recognize that repayable money should be invested exclusively in self-sustaining projects with large multiplier values,” the Deputy Minister of Finance said at the session Leonid Gornin (he did not rule out a scenario in which the return of funds would be facilitated by the abolition of benefits). Financing of social facilities through the IBC remains in question – here positions diverge: direct return of funds in such cases cannot be ensured, but the construction of facilities can provide indirect benefits. Head of the State Duma Committee on Budget and Taxes Andrey Makarov proposed to determine who will act as the controller of the possibility of returning funds – so far, few people think about the latter, he admitted.

Evgenia Kryuchkova, Tatyana Edovina