The Ministry of Finance is allowed to borrow up to 1 trillion rubles in the domestic market.
The government has allowed the Ministry of Finance to further increase lending on the domestic market by 1 trillion rubles by the end of the year. Earlier, Finance Minister Anton Siluanov admitted that the loan program could be increased. However, if the Ministry of Finance chooses the entire additional limit of one trillion, it will exceed the initial borrowing plan (5.5 trillion rubles) by more than 18%.
As Forbes points out, the Ministry of Finance can increase loans against a growing budget deficit. From January to September it already amounted to 5.2 trillion rubles, or 2.2% of GDP, although initially a deficit of 3.8 trillion rubles, or 1.6% of GDP, was planned for the entire year, and in July its size was increased to 4.8 trillion rubles. According to the Ministry of Finance, at the end of the year the deficit will reach 7.3 trillion rubles, or 3.2% of GDP, that is, almost twice as much as planned.
From the beginning of the year until October 30, the Ministry of Finance borrowed a little more than 5 trillion rubles of the face value of the bonds issued. Starting November 18, the Ministry will auction additional issues of OFZ-PD and a new issue of connectors worth 1.05 trillion rubles. The final amount of loans will depend on the actual budget deficit, but it is possible that part of the limit will remain unclaimed due to an increase in non-oil and gas revenues.
There are several important nuances to the budget and financial policy in general.
With high key interest rates, investors demand higher returns on new OFZs. This means that it is more expensive for the country to borrow.
OFZs compete for money from banks and other investors with business loans. If there are many IPOs and attractive returns, it may be more difficult or more expensive for private companies to raise funds.
Receiving loans can support the budget, but in large volumes and actively spending money, it may interfere with the "cooling of demand" for which the central bank maintains a high rate.
As a result, a vicious circle of high key interest rates and public debt was created in which Russia's budget and monetary policy is located.