New White House sanctions restricting the purchase of Russian federal loan bonds (OFZ) during the initial placement, and the risk of their further expansion may affect the long-term strategy of the Ministry of Finance of Russia, but Moscow will be able to cope with the negative effect of the restrictions already imposed, analysts at Moody’s believe, April 19 reported RBK…
According to financiers, the new US sanctions have not yet created serious problems for Moscow. The state has accumulated financial reserves, and the low need for borrowing will help to cope with the negative consequences, according to the Moody’s review.
The measures affect the primary OFZ market, therefore, will not lead to forced sales by American organizations, added the rating agency Fitch. Ruble deposits of the Treasury with the Central Bank and commercial banks in the equivalent of more than 5% of GDP allow the Ministry of Finance theoretically not to borrow at all on the market for at least the next 12 months, S&P Global Ratings are sure.
There are several scenarios for the development of the response to American actions. The Ministry of Finance may switch to the issue of OFZ bonds with shorter circulation periods, as well as begin to actively use budget balances, writes “Gazeta.ru“. In turn, the Bank of Russia can provide additional liquidity to the banking system to mitigate the shock from the sanctions.
Georgy Ostapkovich, director of the HSE Center for Conjunctural Research, told Izvestia that he assesses the first tranche of anti-Russian sanctions as “vegetarian” and does not see “strong pressure on financial aggregates and financial indicators.” As he noted, the Ministry of Finance and the Bank of Russia will make sure that the state banks buy out the state debt of the country.
On April 15, US President Joe Biden signed a decree imposing new sanctions. They touched 32 legal entities and individuals from Russia, who, according to the White House, “made attempts to influence the US presidential elections in 2020, as well as other acts of disinformation and interference.”
The United States banned, in particular, its companies from directly buying Russian debt securities issued by the Central Bank, the National Wealth Fund or the Russian Ministry of Finance after June 14, 2021.
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