Businessman Oleg Deripaska warned that if nothing is done with the current economic situation, then Russia will face problems before end of the next year. In his telegram channel, he clarified the necessity to reduce the Central Bank rate to 5% and reduce the “prohibitively high” ruble exchange rate.
For several months the government has been saying that we need to come as quickly as possible to the “full” exchange rate of the ruble (i.e. about 70 rubles per dollar), the head of the analytical department of AMarkets Artem Deev reminds.
The ruble, strengthened facing sanctions and the collapsed flow of imports into the country, leads to a reduction in company revenues and a drop in tax collection in budget. This is clearly visible from the statistics of the Ministry of Finance, where national oil and gas revenues decreased in the third quarter of 2022 by 14.6% (in annual terms), and not oil and gas revenues sank by almost 30%. And the budget deficit may amount this year to 1.3 trillion rubles (i.e. 1% of the country’s GDP for 2021), the expert explained to “Invest-Foresight”.
“Of course, the problem is not only the strengthening of the ruble, but also the fall in exports due to sanctions, but an extremely strong ruble deprives Russian goods of attractiveness in foreign markets (goods become more expensive). Therefore, of course, the dollar rate in the country should be higher and be at least 70 rubles per dollar”, the analyst assures.
Cheap mortgages, stabilization of housing prices, increase in the well-being of citizens and an acceptable inflation rate are the issues that are also needed to decide, Artem Deev continues. But comprehensively: solely the low rate of the Central Bank of Russia will not solve the problem of rising prices, will not stimulate the people to consume more actively (otherwise economic growth is impossible). The most important thing is the general stabilization of the economy, reduce in the level of anxiety in society, growth in incomes of the population.
“If these problems are not resolved, if next year maintains the level of uncertainty in the population and business that is observed now, the problems in the economic and social area will only grow. In turbulence and crisis situations both people and business will not spend money, they will save it. Which will lead to even greater stagnation of the economy in all its manifestations”, the expert summarizes.