The main events of the last week according to Nabarchi:
The Russian Central Bank noted the persistence of large-scale overheating of the national economy due to the rapid growth of consumer demand over production capacity. The acceleration of inflation and the increased dynamics of the money supply force the regulator to postpone the easing of credit conditions indefinitely. The main financial burden from maintaining strict parameters continues to be imposed on enterprises in the real sector and borrowers with variable interest rates.
The government of the Russian Federation has allowed the Ministry of Finance to exceed the legal limit on domestic borrowing by one trillion rubles. This decision is intended to cover the cash gap at the end of the year while fulfilling large-scale budgetary obligations. In conditions of high key interest rates, drawing such large amounts of liquidity through bonds will lead to a significant increase in the long-term cost of servicing the public debt.
The authorities have approved a bill for a large-scale transformation of the funded part of the pension amounting to more than six trillion rubles into a long-term savings plan. The reform will begin in the spring of next year and will affect citizens' funds that will be created within the framework of a mandatory pension insurance system. The state expects to reduce the direct financial obligations of the budget, while transferring responsibility for the safety and management of the funds to non-state funds.
The vast majority of local companies are faced with the need to optimize costs due to a drop in effective demand and a lack of working capital. The monitoring of business activity registers a simultaneous reduction in business investment plans and a forced upward change in sales prices. The combination of a decrease in product productivity with a decrease in capital investment creates the risk that the industrial sector will move into a state of prolonged stagflation.