If sanctions imposed against OFZs, CBR could assist banks with liquidity, own investors would cover borrowing needs - Siluanov
MOSCOW. March 17 (Interfax) - If additional sanctions are imposed against Russian government debt, the Finance Ministry will rely on domestic investors to cover the needs to finance the budget deficit, and the Central Bank of Russia (CBR) could support Russian banks with liquidity to operate on the country's federal loan bonds (OFZ) market, Finance Minister Anton Siluanov said during a meeting of the State Duma Committee on the Financial Market.
"What will happen if there are any additional restrictions imposed against debt? We shall then negotiate with our financial institutions first of course, with commercial banks. We shall interact with the CBR so that the CBR would assist in resolving the liquidity issues for these financial institutions. We shall seek a solution, though it will of course be unpleasant; however, a solution will be found in any case," Siluanov said when answering questions from the deputies during the meeting.
Gross borrowing of 2.9 trillion rubles and net borrowing of 2.7 trillion rubles is planned via OFZ in 2021. But that amount could be reduced by 600 billion-700 billion rubles of windfall non-oil revenue carried over from last year. Vladimir Kolychev, a deputy finance minister, has said that in theory, domestic borrowing could be reduced by the whole volume of windfall non-oil revenue for 2020, but it has to be remembered that OFZ placements are market operations, not just a means of plugging the deficit. Kolychev said that to some extent the borrowing program could be reduced where it was increased this year in keeping with the transitional provisions to the full implementation of the fiscal rule in 2022. "By this I mean the fiscal rule allows a primary deficit at a structural level for oil prices of around 585 billion rubles, which will be increased this year [by 875 billion rubles] through additional borrowing. And since last year non-oil and gas revenues exceeded our forecasts due to a more dynamic economic recovery, these balances, which formed at the end of last year, can be used to increase expenditure without resorting to the additional borrowing which is now in the budget," he said. Available balances are around 600 billion-700 billion rubles, he said.
Finance Minister Siluanov said foreign investors had bought around 20%-25% of the OFZ sold at auctions this year. "It will of course be a shame if foreign investors stop buying our debt in the event restrictions are imposed, because we see a lot of interest," he said. But "if such decisions are reached then we'll find a response, we'll find a solution as to hit we should act in this situation," he said.
