Russian Federation - Concluding Statement for the 2012 Article IV Consultation Mission Moscow, June 13, 2012

Abstract

now running close to its potential. While demand pressures risk overheating
the economy in the short run, medium-term growth prospects are constrained.
To address these challenges Russia should continue to strengthen the conduct
of macroeconomic policy and tackle long-standing structural bottlenecks.
An ambitious fiscal adjustment is needed to ensure that economic growth is
balanced, fiscal policy is not pro-cyclical, and oil wealth is spent equitably
across generations. Meanwhile, monetary policy should be tightened to keep
underlying inflation on a declining path. The increased exchange rate flexibility
has been a major policy advancement and is helping the Russian economy
absorb external shocks, including spillovers from the international financial
turbulence. A stronger supervisory framework is key to promote sound financial
intermediation. Critically, the new government should deliver promptly on longawaited
structural reforms, including measures to improve the investment climate.