Russia anticipates options if it is sanctioned for national debt?
Amid new sanctions from the US and Western countries, Russia will finance all current expenses if sanctions are imposed on its national debt.
Amid new sanctions from the US and other Western countries, Russian Finance Minister Anton Siluanov said that Russia will finance all current expenses if sanctions are imposed on the country's national debt. In particular, the Central Bank will be able to provide liquidity to commercial banks and financial institutions.
On March 17, at a meeting of the Russian State Duma Committee on Financial Markets, Finance Minister Anton Siluanov said that Russia would finance all current expenses if sanctions were imposed on the country's national debt. In particular, he said, it would be possible to negotiate with the Central Bank on providing liquidity to commercial banks and financial institutions.
He recalled that, in his opinion, the safest thing is “not to increase the budget deficit”, because “there is no deficit – there are no such large loans”. In this case, Russia will be able to overcome the forces of domestic investors investing in government securities without attracting foreign investors.
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| Finance Minister Anton Siluanov. Photo: Tass |
At the end of February, the Ministry of Finance reported that the volume of Russia's national debt in 2020 increased by 5.4 trillion rubles, but its indicators did not exceed the safe level. According to Minister Siluanov, non-residents now account for 20-25% of the new allocation of federal loan bonds. According to the Central Bank of Russia, as of February 1, foreign investors held 23.4% of all federal loan bonds (OFZ) (the share decreased from 30.6% in mid-2020). The head of the Ministry of Finance said that it would be a pity if foreigners stopped buying Russian debt if restrictions were imposed, since the agency sees active interest in it. However, if such decisions are made, the Ministry will find an answer to finance priority expenses.
In 2021, Minister Siluanov said, a decision was taken to reduce the share of participation in the financial market and the volume of borrowing from the balances formed last year. In early March, he confirmed that this year the Ministry of Finance could reduce the volume of borrowing from the forecast figure of 2.94 trillion rubles of net budget borrowing. The minister noted that “reducing borrowing this year will ensure that public debt remains at 20% of GDP for the next three years.”
Previously,Director of State Debt Departmentand State Financial Assets of the Ministry of Finance of the Russian Federation, Pyotr Kazakevich stated that it is impossible to exclude the introduction of new sanctions by Western countries against the activities of Russian sovereign debt, but such a development of events is unlikely. He explained that, in this case, the restrictions "would be contrary to the interests of investors in the respective countries"./.
