Press Release: IMF Staff Concludes Visit to Russian Federation

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.

An International Monetary Fund (IMF) mission visited Moscow during November 16–20, 2015, to discuss the economic outlook and related policies. At the conclusion of the visit, Ernesto Ramirez Rigo, IMF mission chief for Russia, issued the following statement:

“There are tentative signs of economic stabilization in Russia. The economy is expected to contract by 3.8 percent in 2015 followed by a milder contraction of 0.6 percent in 2016 due to the headwinds from lower oil prices. The current account adjustment is progressing rapidly, supporting the ongoing external deleveraging process. Inflation is projected to decline to 12.7 percent at end-2015, and, in the absence of shocks to international oil prices, to continue to fall further during 2016.

“An ambitious medium-term fiscal consolidation program, anchored around a transparent and credible rules-based framework, is required for the country to adjust to lower oil prices. Reestablishing the three-year fiscal framework around a revised oil price rule would help reduce policy uncertainty and support the adjustment. Fiscal consolidation measures will require reforms to the pension system, tax expenditures, and subsidies. The fiscal adjustment should protect needed public investment, other productive spending and the social safety net.

“Monetary policy has been appropriately on hold but normalization can resume once underlying inflation and inflation expectations are firmly on a declining path. The pace of easing should be balanced against external risks and the need to build credibility under the newly introduced inflation targeting regime. The planned fiscal consolidation should support these efforts.

“The anti-crisis measures in the financial sector helped stabilize the Russian banking system. Against this background, it is appropriate to lift remaining temporary forbearance measures in the near future, as the banking system recapitalization program is largely completed.”