The first day of the 15th VTB “Russia Calling!” Investment Forum involved a macroeconomic session where attendees discussed Russia’s monetary and budgetary policies, the state of the economy, the banking sector as well as the labor market.
The discussion was attended by Minister of Finance of Russia Anton Siluanov, Chairman of the Central Bank of Russia Elvira Nabiullina, Minister of Economic Development of Russia Maxim Reshetnikov, Deputy Head of the Presidential Administration Maxim Oreshkin, CEO of IKS Holding Alexey Shelobkov, as well as guests of the conference, Chairman of the Union of Chinese Entrepreneurs in Russia Zhou Lijun and President of Cosmos Group Anil K. Agarwal. The session was moderated by First Deputy President and Chairman of the Management Board of VTB Bank Dmitry Pyanov.
The first part of the macroeconomic session was devoted to the impact of monetary policy on the economy and expectations for economic growth.
Nabiullina said that the key rate is a powerful tool to fight inflation, which made it possible to prevent entering the inflationary spiral. According to her, high inflation is similar to the fever when sick, as economic growth cannot be sustainable on its background. At the same time, she noted that the economy’s potential is growing and will be on an upswing next year, which means that there is more room for demand growth. The Central Bank does not agree that tight monetary policy is necessarily followed by a recession. “We forecast more moderate economic growth than this year. This means more restrained demand, and our monetary policy is aimed at ensuring that supply and demand converge at the right point, where there will be both price stability and sustainable economic growth,” the Central Bank head said. She assumed the key rate increase in December, but emphasized that this decision is not predetermined.
Siluanov said that the Federal Budget of Russia for 2025 is quite tight and will be implemented at any ruble exchange rate. The Ministry of Finance and the Ministry of Economic Development will propose the government to unify all state programs and subsidy schemes. “[Head of the Ministry of Economic Development] Maxim Gennadyevich [Reshetnikov] and I will suggest the government to unify all subsidized programs. Many agencies support their own sectors of the economy. And, each agency designs its own subsidy procedure. It should be systematized, unified, there should be a minimum rate upon which we refuse to subsidize,” said the Minister of Finance.
Reshetnikov said that the Ministry of Economic Development estimates the growth potential of the Russian economy above the Central Bank, because the macro forecast was formed under more relaxed conditions of monetary policy. He noted that the Central Bank’s measures work, but it is important to pursue a joint policy and discuss new preferential programs of the government. Russian businesses take the Central Bank’s actions on the key rate very seriously, Reshetnikov added. He said there is a reduction in investment programs, and further credit cuts will lead to economic cooling. “The measures of the Bank of Russia are working, and it is very important for us to pursue a joint policy, including discussion of the volume of new preferential programs, including those subsidized by the government. For its part, the government is doing the maximum both to expand the supply economy and to help the Central Bank to fulfill the joint task and move faster to easing monetary policy, because excessive restrictions on the availability of credit can lead to a reduction not only in investment but also in employment, economic cooling. There are risks that the economic cooling will be on a scale incompatible with our goals,” the head of the Ministry of Economic Development said.
Oreshkin emphasized that economic policy, including credit policy, should be designed to achieve the goal of long-term development of the country. He said: “The economic policy in Russia has never been based on any immediate objectives, but always on long-term tasks supporting the country’s progress. This means that any carried out economic policy, as well as budgetary, structural, credit policies, should be focused on the long-term development of our motherland.”
In the second part of the macro session, the participants discussed the state of the Russian labor market, opportunities for increasing labor productivity in Russian companies, including government participation.
Following the macroeconomic session, Pyanov said: “Today we thoroughly discussed the impact of monetary policy not only on the development of the economy as a whole, but also on individual sectors, looking for ways to compromise. First, we talked about the importance of the deadline for beating inflation and about a different attitude to those forecasts that must necessarily be achieved. Secondly, we learned about the government’s plans to concentrate all preferential programs in the Ministry of Economic Development, limiting the cases of subsidies to a certain boundary. In our opinion, this will also reduce the budgetary burden and allow us to choose what really affects the potential of the economy.”
The “Russia Calling!” Investment Forum has been held since 2009. Every year, the event attracts an authoritative audience, including representatives of government agencies, heads of Russian and international companies, and investors. The forum agenda covers the most topical issues of the global economy, finance and business sectors. This year the forum was held under the general theme “The Future Capital.”
