SOVEREIGN ECONOMY: TOP EVENTS OF THE WEEK
Russia has withdrawn from the grain deal and informed Turkey, Ukraine, and the UN of its objection to its extension. According to the Russian side, the grain deal can only be resumed if key Russian conditions are met, including the reconnection of Rosselkhozbank to SWIFT and the restoration of the "Tolyatti-Odessa" ammonia pipeline.
The Central Bank expects inflation to accelerate in the coming months in Russia. The indicator will increase as the price pressure grows and as low values from the summer and fall of 2022 drop out of the calculation. The annual price growth has accelerated in both non-food and food categories. According to the Central Bank's base scenario from April 2023, inflation in 2023 will be between 4.5% to 6.5%.
The real effective exchange rate of the ruble decreased by 20.3% during the first half of 2023, as per the estimation of Central Bank. The real effective exchange rate (REER) is an indicator characterizing the dynamics of currency exchange rates. It is calculated as a weighted sum of the real exchange rate indexes of the current year relative to the base year. Each index is multiplied by the share of trading partners' countries in the foreign trade turnover.
The Ministry of Finance has called the further increase of Russia's national debt inevitable. Irina Okladnikova, the Deputy Minister of Finance, announced this in the Federation Council. The level of debt is currently reaching 22.8 trillion rubles, which is 14.9% of the GDP. Russia can only borrow money from internal sources at the moment (funds of non-governmental organizations and the population). Russia cannot increase its external debt due to the imposed sanctions.
A gradual increase in regulated gas prices is being prepared in Russia. Wholesale prices of Gazprom (regulated prices) have been increased by 8% from July 1, 2024, and by another 8% from July 1, 2025, for all categories of consumers (both households and industries), as stated in the orders of the Federal Antimonopoly Service (FAS) published on the official legal acts portal on Monday.