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Russia overview

Cityscape in Russia

The Bank has made no new investments in Russia since 2014. In April 2022, the EBRD’s Board of Governors decided to suspend access to the Bank’s resources by Russia, in response to the invasion of Ukraine. The Bank has closed its office in Moscow. Russia continues to be a shareholder of the Bank

Prior to the suspension of access to resources, we focussed on:

Diversifying the economy: private enterprises and private financial institutions that support non-resource sector growth are key for diversification. About 90 per cent of EBRD investments in Russia in 2013 were in the private sector.

Investing in and setting standards for modernisation and innovation: focus is needed on enterprises that innovate, introduce modern new technologies, or upgrade to international standards, particularly with regard to corporate governance, transparency, energy efficiency, inclusion and gender issues. Improving energy efficiency is a key aspect of modernisation across various sectors of the economy.

Supporting privatisation and private sector development: the role of the private sector in the economy needs to increase through strengthening existing private operators; increasing the MSME share in the economy; pursuing transparent and competitive majority privatisation strategies for state-owned companies; conducting policy dialogue on privatisation; and promoting PPPs as a tool to attract more private sector investment into state-dominated sectors.              

Increasing economic opportunities in Russian regions: Russia is a federal state whose component regions vary widely in terms of per capita income, unemployment and investment. To promote regional development, it is necessary to support projects and reforms that advance transition in regions that are less advanced than Moscow and St. Petersburg and that are committed to improving the investment climate.

As well as being a country where the EBRD works, Russia is also an EBRD donor. In 2013 the Russian government established its first bilateral Technical Cooperation fund with a contribution of €40 million over five years in support of the EBRD’s core operations in the country. Funding is focused on the development of projects in transport and infrastructure, energy efficiency, agribusiness and SMEs. Russia also remains the biggest donor to the NDEP environmental window with total contributions totalling €60 million.

The EBRD’s latest Russia strategy was adopted on 18 December 2012

Current EBRD forecast for Russia’s Real GDP Growth in 2023: 1.5%

Current EBRD forecast for Russia’s Real GDP Growth in 2024: 1.0%

GDP contracted by 2.1 per cent in 2022, less than initially expected, as the economy proved resilient to sanctions in the short term. High energy prices boosted export revenues and the current account surplus. This strengthened the rouble and helped lower inflation. More recently, loose fiscal policy has resulted in an overheating of the economy, in the context of a tight labour market and high rates of capacity utilisation. In the context of the ongoing war and presidential elections in 2024, tightening fiscal policy is challenging. The loose fiscal policy has drawn in imports, while falling energy prices and EU-imposed price caps on Russian oil and oil-derived products have hit export revenues. As a result, the current account surplus shrank significantly in 2023. Financing a current account deficit would present a challenge, with much of the central bank’s foreign exchange reserves frozen and minimal private capital inflows. These challenges have weighed on the rouble, which has weakened by 30 per cent against the US dollar in 2023, further adding to inflationary pressures. In response, the central bank has been tightening monetary policy. A 100 basis points increase in July 2023 was followed by a 350 basis points hike in August, bringing the policy rate to 12 per cent. GDP growth of 1.5 per cent is projected for 2023 as a whole. The outlook for 2024 will depend heavily on how the war on Ukraine and the related economic sanctions evolve; at this stage growth of 1.0 per cent is projected.

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