Россия зовет!

The 16th VTB Investment Forum "RUSSIA CALLING!" tackled the economy's most pressing issues in its macroeconomic session. The focus was on deep structural shifts, foreign exchange market stability, and pinpointing the engines for sustainable long-term growth. A consensus emerged among the panel – which included government officials, business leaders, and financiers – that accelerating progress demands novel strategies in regulation, investment incentives, and capital management.

Key Rate

The discussion began with the key rate. Dmitry Pyanov, First Deputy President-Chairman of VTB's Management Board, noted that private sector sees a direct link: higher key rate means lower investment volumes and lower economic potential. " What's wrong with that logic?" he asked the regulator. Central Bank Governor Elvira Nabiullina responded that it holds true only when there is slack in the labor market, allowing cheap financing to boost capacity. "But if physical resources are already stretched thin, cheaper money just leads to companies poaching from each other. You get higher prices, not more output," said the head of the Bank of Russia. She cautioned, however, against focusing solely on the key rate and borrowing costs: "They matter significantly, but let's not underestimate the importance of low inflation itself," Nabiullina added. President and Chairman of the Management Board of VTB Bank Andrey Kostin weighed in, noting that in the current climate, the key rate is primarily a tool for curbing inflation. "So for now? we're managing under these conditions," he concluded.

Increasing Public Debt or Raising VAT

On the subject of public debt, Minister of Finance of the Russian Federation Anton Siluanov said that medium-term plans cap it at 20% of GDP, with the Ministry opposed to raising it from the current level of around 15%. "Relying on more debt would actually lead to slower growth compared to funding through taxation. VAT is the least disruptive option. It's incorporated into prices, and given our monetary policy stance, any changes to it are largely absorbed without major disruption," Siluanov explained.

Ruble Exchange Rate

Maxim Oreshkin, Deputy Head of the Presidential Administration, framed the ruble's trajectory as a reflection of fundamental changes in Russia's economy and currency markets. He cited several factors: the effect of the working budget rule, a rise in non-commodity exports, new sources of hard currency like crypto mining, and a drop in imports. Simultaneously, the policies to increase transparency of the Russian economy is reducing ‘shadow’ demand for currency, which also supports the ruble's strength. Looking ahead, Oreshkin suggested that balanced growth might require identifying sectors – particularly in high-tech – where increased imports are necessary, and this could call for a more competitive, thus a weaker, ruble.

Fan Yuxin, Chairwoman of New New Shipping, provided an international viewpoint, noting that Chinese partners still see Russia as a land of opportunity. However, she highlighted that high financing costs remain a significant hurdle for decisions on localizing production. One potential solution discussed for funding such projects is long-term retirement savings. Finance Minister Siluanov pointed to the success of the Russian long-term retirement savings program, which has already attracted over 560 billion rubles.

Restriction of External Lending

Economic Development Minister Maxim Reshetnikov asserted that Russia has successfully adapted to the loss of access to Western lending. He noted that over the past three years, no major capital-intensive project has been shelved due to funding shortages. The overwhelming majority of these projects proceed with direct state backing, typically channeled through VEB.RF, he pointed. "They're executed either with subsidized rates or supported by VEB guarantees and capital injections", Reshetnikov clarified.

Basel Must Be Destroyed

The session sparked a fiery exchange over countercyclical capital buffers for banks. Nabiullina defended them as a fundamental prudential tool to protect depositors and creditors. "This isn't some Basel concoction; it's ancient wisdom – save during the good years to survive the bad," she stated. Andrey Kostin countered that the system is failing to deliver in both Europe and the United States. "I used to say 'Basel must be destroyed.' Now I see it's collapsing under its own weight globally," he declared. "Our national context is so unique that Basel is increasingly irrelevant... Perhaps instead of Basel, we should create our own framework – let's call it 'Voronezh, '" Kostin quipped, proposing a homegrown alternative.