Are Russian finances out of danger?
Russia's financial stability indicators are at a safe level, the Russian Central Bank said in its financial market risks review for August,
"An unfavorable external background is formed in the face of expectations of U.S. monetary policy tightening," the regulator said in a statement, noting that it "aggravates the situation in the countries with a high level of foreign currency predominance in the economy (Turkey) and increased debt burden (Argentina)," the Central Bank specified. "Russia's financial stability indicators, on the contrary, are at a safe level," the Bank of Russia said.
The regulator recalled that unlike other countries with emerging markets, Russia is a surplus country with a maximum level of international reserves as a percentage of GDP, which forms a high level of protection of the economy from the potential outflow of capital.
The low level of public debt and the transition to a federal budget surplus this year "are key indicators of a favorable state of public finances," the Central Bank emphasized. "Thus, the fundamental macroeconomic parameters testify to the financial stability of the Russian economy," TASS cited the Central Bank as saying.
The professor at the department of the stock market and investments at the Higher School of Economics, Alexander Abramov, speaking with Vestnik Kavkaza, noted that the stability of Russia's financial system relative to Turkey, Argentina and other countries does not mean its security. "It does not mean that Russia should not worry about future crises and recessions, because the main threat to its stability is dependence on the price of oil, gas and other material resources in global markets. If the economy of the main consumers of these goods collapse, Russia will get a new crisis," he warned.
"In addition, there is still a threat of sanctions in November, due to which both the state and a number of large state-owned banks can lose such a source of replenishment of their resources as foreign funds of non-residents, which is also an additional risk for Russia. Russia's investment climate remains weak, and coupled with our dependence on oil and gas, it provides a long-term threat to the ruble. As a result, we get that with external stability and even resistance to sanctions, our economy does not grow, which is a stable stagnation," Alexander Abramov stressed.
The advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house, economist Sergey Hestanov, on the contrary, is optimistic about the current situation. "We now have several surpluses: first, the trade balance surplus. Second, an external balance surplus, as Russian companies receive more money from abroad than they send, which allows the Central Bank to form large international reserves. Third, we have growing international reserves in foreign currencies. The situation when all three parameters are increasingly positive inspires optimism that even if the deterioration takes place, our financial will not be in great danger for at least several years," he explained.