Some stabilization and even recovery in may 2020 in economic activity apparently strengthened the confidence of the Bank of Russia in the chosen tactic to counter the economic downturn. The head of the Central Bank Elvira Nabiullina confirmed that the regulator does not intend to take urgent action in this area, against the idea of a Fund of bad assets, against a return to negative real interest rates of the loan. The Central Bank supports the basic idea of government in dealing with the crisis — to Fund a package of crisis aid moderate increase in the budget deficit, not the abolition of “fiscal rules” and significantly increasing the volume of loans in the domestic market in 2020.Regular press conference of the head of the Central Bank was primarily interested in the reaction of the Bank of Russia on important news of the last days: the Latter have not yet been approved, but the basic provisions of the Ministry’s representatives have already commented on Wednesday-Thursday as approved or at least uncontested. We will remind, Elvira Nabiullina is a member of most of the discussions in the government these questions, then as the Central Bank, keeping in most of these matters, the independence and autonomy, in any case forced to adjust its monetary policy (DCT), on the basis of decisions.The main thesis of the head of the Central Bank in this context can be represented as follows. De facto Central Bank confirms invariability of its strategy to counter the crisis, in which the main dampers of the events of April—may for the economy will be the banking system, restructuring of credit portfolios and reduction in Bank profits. Discussed in the Federation Council the idea of creating a “Fund of bad assets” to the banking system, according to Elvira Nabiullina, now looks maloaktualny. The intention of the Ministry of Finance to temporarily depart from the principle (but not letters) “fiscal rules” designed to reduce the budgetary costs (over the limit transfers from the Fund) with a sharp drop in oil revenues, the Central Bank sees quite reasonable: Russia still historically low debt, the share of OFZ in the Bank balance sheets is relatively small, the financing of budget deficit by borrowing on the domestic market — a decision that is not causing the Bank of Russia’s objections. Thus, in 2020 a major new anti-crisis spending will be paid with new loans Ministry of Finance (up to 2.5 trillion), budget remnants of last year (to 1 trillion), redistribution of current Federal expenditures in the reserve Fund (RB 0.4 trillion), partly due to internal reallocation of funds of national projects. The Bank of Russia in this situation do not have much to adjust monetary policy, while Elvira Nabiullina, answering questions about the extent of the reduction of the key rate, but rather reacted negatively to the possibility of reducing the real level ��tuvok on loans in the economy to zero or negative.The head of the prep Department of the Central Bank Alexey Zabotkin, we will note, on Friday I got a promotion — he has now become Deputy Chairman of the Central Bank. His chair to supervise the Lord of Zabotkina the Department is Kirill Tremasov, who previously worked in the Ministry of economy and the company “Loko-invest”.Note, in the present assessment, the economy Ministry forecast a fall in GDP in the second quarter of 2020 (9.5%) and in 2020 as a whole (5%) slightly worse than the forecast of the Bank of Russia, and now worse than the consensus forecast of the HSE (4.3% in 2020). Thus, as of mid-may, most analysts, regardless of affiliation believe in the restoration of pre-crisis GDP level in the first half of 2022 — estimate the duration of future recovery growth increased by six months. Meanwhile, some corrected and the picture of the reaction of economic players to a sharp decline in demand in the economy, the risk of insolvency of counterparties and to continue Loktionov.This is evident in the “Monitoring of sectoral financial flows,” the Central Bank for 11-15 may (.pdf). Of the Central Bank in the document now examines not only incoming, but outgoing financial flows compared with the conventional “norm” of yesteryear. According to the Central Bank, in early may weekend in terms of sectors, there was a surge of previously deferred fees, which differ in scale by industry, then in the first week of may, economic activity stabilized at the level of less than implies a full restoration, but is quite high (the figures of the Central Bank because of the strong calendar of distortion is hardly relevant quantitatively and qualitatively more important). However, the Bank of Russia fixes in terms of sectors, the decrease in outgoing flows: the Central Bank explains this by the April collapse of the incoming payments, but what is happening is clearly there and part of the mode of minimizing and delaying outgoing payments in connection with accumulating risk. There is another medium-term factor, which is almost not discussed at the press conference of the head of the Central Bank: this is the future plan for post-crisis recovery, which will be submitted to the government, the Ministry of economy on Monday. The contents are unknown, except that it is created “over” already announced and ongoing packages of support (basically a new social-support measures, loan guarantees and funding concessional loans, regulatory exemptions of the Central Bank to banks and the tax deferment and write-offs, deregulation). It in the Ministry of economy to assess the scale of up to 10% of GDP, the “recovery plan”, obviously, will add to these measures of additional government spending, the obvious objective of this plan is to raise the recovery, GDP growth in the years 2021-2023 higher now planned 3-3,1% GDP growth per year.Dmitry Butrin
