OFZ: manageable near-term issuance target, ambitious long-term plan

RUSSIA ECONOMICS - Report 07 Oct 2021 by Evgeny Gavrilenkov and Alexander Kudrin

Russia’s Finance Ministry released its tactical (for 4Q21) and strategic (for 2022-24) borrowing plans last week. The former looks quite moderate (R505 bln), while the latter remains ambitious (R3.6 trln annually). Nevertheless, the cash position of the government is still comfortable, which allows it to minimize issuance during periods of high interest rates. The budgetary framework assumes that the so-called “fiscal rule” may be suspended in case of emergency and that borrowings will not be necessary at all. This backstop facility will be used only in an extraordinary situation, but the issuance policy becomes more flexible with this provision in place. We expect local commercial banks to remain the main buyers of OFZs in the coming years.

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