21 Apr 2022 13:59

Nabiullina: sanctions impact even highly localized production, example is problem with buttons

MOSCOW. April 21 (Interfax) - The sanctions imposed against Russia after the start of the military operation in Ukraine have hit not only production facilities that are heavily dependent on imports, but also those whose level of localization is high, Central Bank of Russia (CBR) Governor Elvira Nabiullina said.

"Because of the sanctions, Russian consumers and producers are losing access to markets for imports and exports of finished products, components. And problems may arise even when there is production with a high degree of localization, when there was already a fairly high degree of import substitution. For example, if there is an interruption in the supply of some components, spare parts, the share of which in the final product may be small," she said, speaking in the State Duma on Thursday.

As an example, Nabiullina cited garment manufacturers who faced difficulties in acquiring fittings. "The main suppliers were from the European Union. And what are we talking about here? For example, buttons. They are many places where they are made, but as enterprises tell us, according to their estimates, finding new partners, setting up new logistics can take several months," Nabiullina said.

"It's the same with the paper industry, for example. All of our wood is Russian, but the bleaching chemicals were imported. Now producers are switching to alternative suppliers, developing their own chemicals, but this also takes time. In the food industry, raw materials are domestic, and the usual foreign packaging urgently needs to be replaced. And all this takes time," she said.

Exporters also have to look for new logistics: many ports are closed for Russian ships, there are restrictions on the operations of Russian freight carriers in the EU, she said. "The problem here may be rooted in the underdevelopment of infrastructure in new directions in order to dramatically increase volumes. We need to create infrastructure, and we can do it, but it will also take time. Difficulties are occurring in all sectors, in large and small companies," the CBR chief said.