Net government debt of Russia returns to pre-sanctions level
For the first time since the introduction of sanctions and the fall in oil prices in 2014, net government debt of Russia shows negative indicators, RBC reported citing analysis of the data of the Ministry of Finance and the Bank of Russia.
Publication notes that in 2019 government debt in the broad sense (internal and external debt of the federal government, regions and municipalities) decreased compared to liquid assets of the federal government, regions and extrabudgetary state funds due to record number of reserves that covered the government debt.
It's noted that Russia can, if necessary, cover all debts at the expense of government deposits of the Central Bank and commercial banks, without resorting to other means.
As professor of the HSE's Stock Markets and Investment Markets Department Alexander Abramov noted in an interview with Vestnik Kavkaz, achieving negative net government debt doesn't mean that the Ministry of Finance will give up its lending policy in the financial markets.
“At least when it comes to domestic market, there are no special changes in the policy of the Ministry of Finance. It's interested in attracting both domestic investors and non-residents, taking into account those risks that arise due to sanctions against non-residents. Alas, foreign lending market is likely to be closed to the Ministry of Finance due to sanctions and is no longer seen as a way to raise significant funds, which is not as scary since there are various forms of budget surplus and revenues in reserves, so it’s important that the Ministry of Finance now has a lot of money, they should use them efficiently,” he said.
Former deputy chairman of the Central Bank of Russia, head of the Department of Finances, Money Circulation and Credit of RANEPA Alexander Handruev ageed with him. “The only country in the world with zero government debt is Denmark, but it also has negative key rate. Overall, if a country has opportunity to refinance its debt with cheaper loans, it's beneficial to do just that rather than repay it."