Eastern Europe

Russia Looks To Add Sovereign Debt To Its Low Levels To Get Through Pandemic

Russia Looks To Add Sovereign Debt To Its Low Levels To Get Through Pandemic
Elvira Nabiullina
Image by Press Service

Many in the West do not realize that Russia has a long history of prudent financial management during the Putin reign; currently the Russian Federation has very low levels of sovereign debt, and large rainy day funds built from oil and gas revenue, which provides most of the nation’s federal revenue.

With the Chinese coronavirus pandemic now raging throughout the capital, Moscow, the Bank of Russia is looking to add to the sovereign debt level to help plug holes in Russia’s finances during the crisis.

Market demand would likely be strong, even with sanctions in place. Buyers exist.

“We really have a fairly low debt, one of the lowest. Of course, we have the potential to increase sovereign debt in some way,” she said. “A certain increase in public debt is possible, it is being discussed, but we must do it carefully. The Central Bank does not plan to participate in the direct redemption of the sovereign debt,” she said, reported Russian state news agency TASS.

At the same time, according to Nabiullina , a low level of sovereign debt is Russia’s competitive advantage, which creates additional stability of the economy, regardless of the external situation.

Earlier, Finance Minister Anton Siluanov said that the Finance Ministry plans to increase the volume of public debt by 1.5-2% of GDP in 2020 to compensate for shortfalls in non-oil and gas revenues, as a result of which the amount of funds raised from the market can reach 4-4.5 trillion rubles.

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