16 Feb 2022 15:41

Siluanov: Possible sanctions against Russia could lead to volatility, it's unpleasant, but not fatal

MOSCOW. Feb 16 (Interfax) - Possible harsh sanctions against Russia that are being elaborated by foreign countries amid the Ukraine crisis could lead to volatility, but will not be "fatal" on the whole, as the authorities understand how to deal with the problems that could come from possible restrictions, Russian Finance Minister Anton Siluanov said.

"Naturally, we have such plans [in case of sanctions]," Siluanov told journalists on Wednesday.

The idea of disconnecting Russia from SWIFT has been put on the back burner, Siluanov said when commenting on concrete examples of the possible sanctions that have been voiced in the context of the legislation being drawn up.

"As for SWIFT, the latest information from our Western partners has emerged, and even they understand how absurd this whole situation is, inasmuch as we will suffer and they will also suffer. If they want to be tormented in order for us to be tormented with them, then it's probably warranted. But common sense seems to be winning, I've read information saying that the issue of disconnection from SWIFT is in any case being put off. Although, nothing is impossible, and their decisions, we see, are reconsidered fairly often," he said.

"If this measure is introduced, we'll switch over to other possibilities for the transmission of information on financial transfers, whether that's the SPFS [System for Transfer of Financial Messages] or teletype or transporting payments in suitcases... I'm exaggerating, of course," Siluanov said.

Siluanov commented on potential new sanctions on the sovereign debt with his traditional "unpleasant, but not fatal."

Sanctions against banks would be "unpleasant on the whole," Siluanov said. "Obviously, we will guarantee all deposits here, all settlements between our depositors, including exchange payments, at these banks. We have enough foreign currency liquidity, thank God, and enough foreign exchange reserves, as well," he said.

"It's unpleasant, yes, if they want to play dirty tricks, as they say, on our citizens. Probably for them [foreign politicians], this is a viable option. Although I'll say again, this also won't be fatal for the economy in any way, for the financial system. They say themselves that we have a financial shield in the form of foreign exchange reserves, low debt, a budget surplus, and rule. There is a definite kind of wall, a barrier against sanctions in Russia, thank God," Siluanov said.

"Yes, of course, I can't say that we won't feel anything, especially if a whole line of other sanctions are introduced. But I will repeat again that we have anticipated the situation, will work even under these conditions, although, of course, this will at first lead to a certain volatility, but what can you do, it's not the first time," he said.

Any possible restrictions on Russian exports could lead to growth in prices, Siluanov said.

"And if such restrictions are introduced, then price growth could in a lot of ways compensate for these restrictions. The same as with Nord Stream 2. They don't launch it, they want to introduce sanctions in relation to this project, and gas prices go up. If restrictions are introduced on exports of energy resources from Russia, we'll pivot to other markets, on the one hand. On the other hand, we're one of the largest exporters, if we're talking about oil, then three countries, the U.S., Saudi Arabia, and Russia, are the largest exporters," he said.

Stress-testing of the budget's resistance to these kinds of potential restrictions has been carried out, Siluanov said.

"Such assessments have been done. Not for nothing we created our reserve, the National Wealth Fund. And it will also be used for such situations. Therefore, the budget is more or less protected. As for the economy, new sales markets and new suppliers will be sought out," he said.