Russia’s Finance Ministry has upgraded the country’s GDP growth outlook for this year from 0.6% to 1.5-2%, Finance Minister Anton Siluanov said on the sidelines of G20 finance ministers and central bank governors meeting.

“On the whole we agree that the economy will be growing faster than initially expected. Previously the outlook for this year was 0.6%. Our estimates are close to the figures announced by Economic Development Minister (Maksim Oreshkin – TASS) – from 1.5% to 2%,” he said.

Oreshkin said earlier that as the economy had adjusted to the new environment growth is expected in more sectors in 2017 compared with last year. The official outlook of Russia’s Economic Development Minister for this year implies a 0.6% GDP growth. Oreshkin said he expects a stronger growth for 2017. In the second half of this year GDP growth will exceed 2%, which means it will be higher than 1% in the first half of 2017, the minister said.

On foreign currency purchases

Russia’s Finance Ministry may purchase up to $1 bln for current budget expenditures in 2017.

“There are still debt liabilities, external currency commitments. It is possible to purchase at least 1 billion dollars (by the end of the year – TASS),” Siluanov said, adding that the issue is about purchases beyond the funds meant for replenishment of the Reserve Fund.

According to Siluanov, the ruble’s fundamental exchange rate versus the dollar is 10-12% lower.

“I think that it (the ruble – TASS) is over-strengthened by around 10-12% versus its fundamental value,” he said.

This makes the currency purchases meant for budget expenses very profitable, Siluanov said, though the Ministry may not use this possibility.

As reported earlier Russia’s Federal Treasury may start buying currency for the current budget expenditures of the Finance Ministry starting January 2018. Roman Artyukhin, head of the department, said that the mechanism implies that the Treasury will be able to directly enter the Moscow Exchange to buy currency for the current budget spending as well as to buy foreign currency by using additional oil revenues. Currently, the Treasury is preparing a roadmap to develop the procedure of direct purchases of currency on the Exchange, he added.

On inflation 

Russia’s Finance Minister Anton Siluanov considers the inflation target of 4% feasible for the end of this year.

“The accumulated inflation as of now is 4.4%, which means that there are all reasons to say that the target of 4% inflation is quite feasible for the end of this year, unless any serious changes occur,” he said on the sidelines of G20 finance ministers and central bank governors meeting.

According to Siluanov, the Finance Ministry is not interested in bringing inflation further down if it is impossible to keep it stable for a long period of time. “We don’t need to bring it lower and then higher. We have to create a predictable environment,” he said.

The minister added that many factors influence inflation, including the harvest, the ruble’s exchange rate, as well as current oil prices.