On the great and unused opportunities of the Central Bank

Nezavisimaya Gazeta published an article by Mikhail Ershov, Principal Director on Financial Studies, Head of the Financial Analysis Department of the Institute for Energy and Finance on the mechanisms for stimulating economic growth in Russia.

Accelerating economic growth, the importance of which has been constantly discussed lately, requires increased investment. Given the existing budgetary constraints, it is assumed that the bulk of financing for new investment projects should be provided by private investors. The formation of new investment instruments and the simplification of their application for private business should give an impetus to the growth of investments. The government and the Bank of Russia have already approved a "road map" to increase the availability of financing for investment projects. Stimulating the growth of private investment is indeed the most important task. However, in the Russian Federation there are also other mechanisms for stimulating economic growth, which are still very little used.

In Russia, during the pandemic crisis, the volume of support for the economy amounted to no more than 4% of GDP, while the decline in GDP was only 3%, which is better than in many countries. However, after 2021, when the “low base effect” and the effect of state support are played out, the economy may return to low growth rates and new additional financing will be required.

In many countries, financing of government spending is provided by the interaction between national central banks and national ministries - central banks buy government securities from their Ministry of Finance. This significantly expands the capabilities of the Ministry of Finance.

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