Nabiullina: the dependence of the Russian economy and the ruble from oil price declines

MOSCOW, January 22. The dependence of the Russian economy and the ruble from oil price declines, said the head of the Bank of Russia Elvira Nabiullina on the expanded Board of the Ministry of Finance.

“The dependence of the economy and the ruble from oil is reduced. But, of course, the desired structural efforts to make the diversification of the economy and to further dependence on oil prices declined,” said she.

The rebound in oil prices can be, but the high prices of previous years will not be, said the head of the Central Bank of the Russian Federation.

“For our economy, the situation on the oil market is a major factor. And here Mr Siluanov (Minister of Finance Siluanov – approx. ed.) was right. The rebound in oil prices can be, but to expect that they will return to the high level, which was how years ago, you can’t,” she said.

According to her, the coordinated action of the Ministry of Finance and the Central Bank will allow to overcome current challenges.

“New developments of the external economic environment facing monetary and fiscal policy challenges. I’m sure if we work together, how we acted before, we can overcome it”, – believes the head of the Central Bank.

“Priority number one”

Nabiullina believes that today it is not enough to maintain macroeconomic stability in the country, you need to create points of growth for the economy.

“In this new external environment is necessary not only to focus its efforts on maintaining macroeconomic stability, it is the number one priority, but to have a positive agenda of measures which will create conditions for economic growth,” she said.

Low level of budget deficit, government debt and inflation should be the basis for the development of the Russian Federation, Nabiullina said.

“Measures of a structural nature must be not to the detriment, and on the basis of macroeconomic stability. Because right now, the current situation poses a General challenge for fiscal and monetary policy. This challenge is the preservation of macroeconomic stability in the conditions of sharp deterioration of the situation on the markets of goods,” she urged, explaining that macroeconomic stability is a “low deficit, low debt, and low inflation”.

The Central Bank will be difficult to keep inflation under control during risky fiscal policy, said Nabiullina.

“DCT and fiscal policy are interrelated. If an unbalanced budget and uncontrolled growth of public expenditure, this will lead to growth and long-term interest rates, and inflationary expectations. In these circumstances, the Central Bank will be more difficult to keep inflation under control,” she said.

Maturity test

The ability to survive in the current situation, while maintaining macroeconomic stability is a test for the maturity of the Central Bank and the Finance Ministry, said Nabiullina.

“In many ways our ability in unfavorable external conditions to maintain macroeconomic stability and maturity test, and that we are able to make difficult but right decisions in difficult circumstances. This will keep the trust of the population and business and to our budget policy,” she said.

To maintain the Reserve Fund and national welfare Fund

Reserve Fund and national welfare Fund (NWF) should be preserved, despite the crisis, said the head of the Bank of Russia.

“I must say that the Ministry of Finance always in recent years has followed this principle (maintaining macroeconomic stability – approx.ed.). And the result of these initiatives, which were created by the “airbag” as the Reserve Fund and national welfare Fund. It is important, of course, all these gains to save it,” she urged.