Accounts Chamber weighs in on financial risks

The Russian financial market is experiencing significant risks; still, its development rate is not up to the scale of the national economy, according to the conclusions in the Accounts Chamber’s recent report.

Experts of the government body headed by Alexei Kudrin believe that Russia has not improved its position in the world in terms of financial market development. Stability of the country’s financial system was ranked 120th in the world, which is a sign of “substantial risks.”

At the same time, Russia has the sixth largest GDP with due account for purchasing power parity (keeping ahead of such developed countries as United Kingdom and France) and the 11th largest nominal GDP. This means the impressive scale of the Russian economy is inconsistent with the development of its financial market.

The banking sector (which is the essential part of the financial market) is facing the greatest scope of problems. In the past years, the assets and own funds of the Russian lending institutions have grown only insignificantly while the lending of the non-financial sector has plunged substantially in real terms.

“Russia’s financial markets were underdeveloped even during the period of their most active growth in the 2000s before the crisis,” economist Dmitry Afanasyev comments. “Right now, chances of a breakthrough here are low. As personal income decreases, people are not rushing to invest in instruments they know little about such as shares or even bonds.”

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