CBR lowers forecast for bank liquidity surplus in 2023 due to growth of cash in circulation

MOSCOW. Aug 1 (Interfax) - The Central Bank of Russia (CBR) has lowered its forecast for the structural liquidity surplus in the banking sector in 2023 by 800 billion rubles and expanded the range of its forecast to 1.3 trillion-2.2 trillion rubles, the CBR said in its monetary policy report published on Monday.

The average liquidity surplus in the December period of averaging bank's mandatory reserves is estimated in the range of 1.1 trillion-2.0 trillion rubles.

"This change is due to the increase of the estimate for the growth of cash in circulation in 2023 to 2.0 trillion-2.5 trillion rubles taking into account data for the first half of the year," the CBR said.

The forecast for the banking sector's liquidity surplus, as before, takes into account the impact of the fiscal rule in 2023 and the sale of foreign currency on the domestic market as part of its implementation. In addition, 0.25 trillion rubles will consist of forex sales from August to December 2023 due to the use of National Welfare Fund (NWF) resources for their investment in permitted financial assets within the Russian economy.

"Furthermore, some budget spending might be financed through Russian government transactions. These transactions will form the main inflow of liquidity into banks," the CBR said.

The current forecast sees balances on banks' correspondent accounts increasing by 1.1 trillion-1.3 trillion rubles by the end of 2023 compared to the figure at the start of the year.