“Russia is isolated with its economy in tatters,” said President Obama in his State of the Union address on January 20, 2015. At that time, many thought it was true: the Russian currency was in free fall, while the federal budget was losing its revenues and beginning to extensively rely on reserves accumulated in previous years, and so many experts predicted the collapse of the Russian economy—an economic decline of 10 percent or more, comparable to the 2008–09 crisis. But though the Russian economy plunged into a crisis and could not halt its decline for six consecutive quarters, the real scale of the economic shocks was significantly smaller. The fall in GDP was 3.7 percent in 2015, and most experts foresee a drop of around 1 percent in 2016. Oil prices’ rebound from their nadir allowed the ruble not only to stabilize, but to gain a foothold. A 10 percent fall in private consumption has not led to any visible increase in social tension.
Short-term forecasts for the Russian economy are gloomy, and do not envisage a rapid post-crisis recovery. In the medium and long run, if the conflict in eastern Ukraine is not peacefully resolved and Western sanctions are not removed, the economic situation may worsen, but no collapse will occur. The primitive structure of the Russian economy and Putin’s pro-market economic doctrine will prevent chaos, and disasters will not be able to turn around the economy’s sluggish growth.
The Economy’s Surprising Stabilization
For many the biggest mystery of the past year was the relatively moderate drop in the Russian economy. In early 2015, many experts predicted an inevitable 8–10 percent decline, basing their projections on the fall of the ruble, falling imports and expectations of falling investment. However, nothing of the sort happened. Why? I see three reasons for this.
First, the base of the Russian economy is the production and export of raw materials and commodities. Unlike 2008–09, there is no crisis in the global economy, and the main consumers of Russian raw materials (Europe, China and Middle East) continue to grow, albeit unevenly; there has been no reduction in demand for Russian raw materials this time, as opposed to six years ago. Moreover, the key product of Russian exports—oil and refined products—recorded a slight increase, both in production and in exports. The stability of the Russian raw-material sector entailed the stability of railway cargo (more than 70 percent of its turnover is raw materials and commodities) and pipeline transportation volumes (which in terms of its effect on GDP is equal to railway-cargo turnover).
Taxation of the Russian oil and gas sector is structured such that the main part of the increase in world oil prices benefits the budget. And, vice versa, the decrease in oil prices hits the financial situation of oil companies at a much smaller scale than the revenue base of the federal budget. Moreover, all export-oriented industries benefited from the devaluation of the ruble (local production costs paid in rubles devalued in currency terms) and from the government's policy of freezing wages in the public sector; workers’ pressure to raise wages plummeted. All this has allowed the raw-materials sector to maintain production and keep the necessary investments.
Second, by 2015, the Russian government launched a full-throttle program to finance ambitious military procurement and reinvestment into the defense industries, which are mainly state-owned. On this basis, the production of military products in 2013–15 grew by 15–20 percent annually, and approximately the same growth should continue in 2016. The rapid growth of the military industry evidently benefited many industrial sectors and prevented the decline in industry as a whole.
Third, thanks to the reforms of the nineteen-nineties, the Russian economy became a market one, that is, it is inclined to restore equilibrium using a free-floating ruble exchange rate. We must acknowledge the Russian authorities, who not only did not freeze prices during the crisis, but did not even discuss this idea. As a result, the economy was able to quickly adjust to shocks both external (decline of oil prices and 50 percent devaluation of the ruble) and internal (a ban on food imports from Western countries). However, the price of this adjustment was the rise in inflation to 17 percent in spring 2015, a 10 percent decrease in the level of private consumption and 40 percent reduction in imports.
The Ruble’s Rollercoaster
The second important mystery of the past year, the fast recovery of the ruble after its collapse in December 2014 and its relative stability afterwards, can be solved much more easily.
On the one hand, since 2012 the ruble has been an “oil currency,” as is evident from comparing the movements of oil prices and the ruble-to-dollar exchange rate rate. Statistically, in the 2014–2015, 92 percent of the fluctuations in the ruble-dollar rate were explained by changes in oil price. In the first half of 2015, oil prices were slowly, but steadily, growing from $32 per barrel in January to $65 per barrel by the beginning of the summer. Thus the stabilization of the ruble exchange rate in the spring of 2015 and its strengthening by 50 percent, as well as the slight increase in foreign exchange reserves of the Bank of Russia, should not be surprising. As soon as oil prices fell in the fall of 2015, the ruble devalued as well, and as oil prices recovered in the spring of 2016, the ruble regained its value.
On the other hand, in December 2014–January 2015 the Russian economy faced significant pressure on the capital account of the balance of payment, due to huge scheduled repayments of corporate foreign debt. Later on, the demand for foreign currency by Russian banks and companies had plummeted. Moreover, in the early autumn of 2015, Western financial markets welcomed some Russian companies; Gazprom and Norilsk Nickel were able to issue new Eurobonds, and a number of companies were able to agree on debt refinancing. In the autumn of 2015 the largest Russian borrower, Rosneft, which had greatly contributed to the debt currency crisis in December 2014, solved its problems by agreeing to a $15 billion loan from China secured by future oil deliveries.
A change in the Central Bank of Russia’s policies in late 2014 also played an important role in stabilizing the situation. The CBR finally decided to move to a floating exchange rate, and was able to explain to the Kremlin that the policy of supporting the ruble by wasting foreign-exchange reserves is futile and would only worsen the state of the economy.
The CBR’s rising of interest rates caused an increase in banks’ ruble deposit rates. Coinciding with the increase in oil prices, that led to a change in households’ savings behavior, ceasing the practice of purchasing foreign currency (from mid-spring of 2015 they began to actively sell it) and increasing ruble savings, providing additional stability to the ruble.
While the Russian economy has adjusted to new realities (low oil prices and a recession), public finances did not, and in the current run, the tough budgetary situation is the Kremlin’s major concern—wages are frozen, pensions are indexed well below inflation and all other expenditures have faced cuts for two years in a row—and will remain its core problem for years to come.
Several issues constrain public finances, none of which can be solved immediately:
1. For a decade since 2004, revenues from the taxation of oil and gas production and exports were the major source of budgetary income, accounting for more than 50 percent. The tax system was structured such that in 2005–14, 85 percent of the increase in oil prices was going to the federal treasury (since 2015, this share has been reduced to 60 percent). On the one hand, that allowed the government to accumulate huge fiscal resources (the Reserve Fund and National Welfare Fund) and inflate expenditures (social entitlements and the military). But on the other hand, as oil prices went down, the federal budget suffered the most from the shrinking revenue base. The fall in oil prices is partly compensated for in the budget by the devaluation of the ruble (as oil revenues are planned in rubles), but the decline in demand for foreign exchange among households banned from foreign travel resulted in a stronger ruble than needed for full compensation in the budget.
2. For many years Russia has existed in a high inflationary environment. That resulted in the enacting of special legislation that requires the indexing of many entitlements at CPI level. When the economy grows, along with budgetary revenues, this does not create a serious problem for the budget. But the situation is altogether different when the economy falls or stagnates while inflation remains elevated.
3. In 2011, then president Medvedev adopted an enormous financing plan for military procurement and investment in the defense sector until 2020. Those expenditures grew steadily in the budget, ousting investment and human-capital expenditures. This plan allowed the defense industry to expand, and in the coming years expenditures could not be cut, as many procurements were prefinanced and needed to be fulfilled. Though high inflation has eroded the real value of these expenditures, they will remain a heavy burden on the budget.
4. Russia is facing a significant demographic challenge: its population is aging and shrinking, and the pressure of pensions on public finances (Russia’s pension system is state-run) is growing, and should escalate in years to come. If in 2014 the ratio of taxpayers of working age (paying payroll taxes) to those of pension age (receiving pensions) was 2.5:1, according to a Rosstat forecast, it should reach 2:1 by 2030. This escalation of fiscal pressure emerged in 2015–16, as the economy stopped growing, as did wages (the basis for payroll taxes), while the government confiscated savings from the cumulative pension scheme for the third year in a row. There is not much space for a viable solution: the government must either increase taxes or the pension age—both would be extremely unpopular—and the decision is therefore being postponed until after the 2018 presidential election.
In this circumstance, the Kremlin is facing a choice between a high budget deficit and a cut in expenditures. Though by all standards the state debt in Russia is small (15 percent of GDP), the government is not willing to increase the budget deficit above 3 percent of GDP, which is considered a secure level. But even this deficit could not be financed by public borrowing, as Western sanctions de facto prohibit Russia to borrow abroad, and the domestic market, lacking long-term savings, cannot accept long-term government bonds.
As a fallback, the Kremlin has only one option at the moment: to freeze and cut (both in real and in nominal terms) its budget expenditures. Public wages have been frozen for 2015–16, though accumulated inflation was 20 percent in two years. In 2016, pensions were only indexed by 4 percent, though inflation in the previous year was 12.9 percent. In 2015, budgetary expenditures (except social and military) have been cut by 5 percent from the level dictated by the budget, while in 2016 they were cut by 10 percent.
In the short run, this policy is rather effective, as it allows to stabilize the budget and does not cause significant social unrest. But in the long run, this approach cannot be justified, leading to accumulating demand for expenditures and degrading quality in public services.
Did Sanctions Matter?
In assessing the economic impact of Western sanctions, one has to be very careful in one’s judgement: Russia is facing a structural economic crisis that was caused by falling oil prices, domestic institutional weaknesses resulting in declining investment and Western sanctions. Since all those factors act together, it is not a trivial task to separate their effects. Sanctions are divided into two varieties: financial and technological. They also cover three main sectors of the Russian economy: banks, military production and the oil sector.
Undoubtedly, Western financial sanctions are the most easily measured, and the strongest in their effect. They prohibit Western banks and companies from providing capital and loans to Russian banks and companies under sanctions.
Since the mid-2000s the Russian economy has relied heavily on foreign borrowing. After sanctions were imposed, since autumn 2014 Russian banks and companies have had to repay old loans while being unable to refinance even a small portion through new borrowing. Coincidentally, the pressure of the scheduled repayment of foreign loans in late 2014 and early 2015 was enormously high—$73.3 billion in two quarters (about 10 percent of GDP)—becoming one of the dominant destabilizing factors in the fall of 2014. Banks and companies that wanted to repay their loans were seeking hard currency, while export proceeds were declining because of the fall in oil prices. The ruble devalued fast, some days losing up to 10 percent of its value. The situation was aggravated even more by some mistakes made by the Central Bank.
All combined that created a perfect storm for the Russian financial market, resulting in a collapse of the ruble that at one point fell to the level of 1 euro cent per ruble, compared to 2.2 euro cents per ruble a year before. For many, this episode created an impression of the collapse of the entire economy.
But since February 2015, the situation has been improving rapidly. The Central Bank raised its interest rates and started to provide loans in foreign currency to banks and companies looking to repay their debts, thus reducing the demand for foreign exchange in the market. Oil prices rebounded since February 2015, and by May the ruble regained 40 percent of its value.
Since the second quarter of 2015, the pressure of debt repayment on Russia’s balance of payments declined significantly. In the next four quarters combined, banks and companies were required to repay $41.7 billion. The pressure of Western financial sanctions on the balance of payments (foreign debt repayment) in the last quarter of 2014 was twice the burden of lost oil export proceeds. In the first quarter of 2015, those two factors were roughly equal, while afterwards the fall of oil revenues affected the financial situation much more, being four to five times bigger than the repayment of foreign debt.
The projections of the CBR say that in the coming two years this amount will not exceed $20 billion per quarter, while deducting the amount of affiliated loans it may be one-third less. Of course, the permanent repayment of foreign debt equivalent to even 3–4 percent of GDP creates significant pressure on the economy, but in the case of Russia, this pressure is compensated by the decline in capital outflow.
Oil Production Grows Under Sanctions
The sector-targeted sanctions that were imposed on the Russian oil industry did not touch the gas sector at all, as Russian gas is vitally important for the European market. And as became evident soon after the announcement, sanctions on the oil industry applied only to Arctic deep-sea and shale exploration. The majority of the reserves of Russian oil companies are located in far distant regions, and cannot be developed without use of the Western technologies that are under sanctions. But those projects are currently in the earliest stages of geological study, and none of them will enter the development stage within the next five years. Moreover, with the current level of oil prices, all those projects are economically nonviable. As a result, Western sanctions have no impact on the current volume of Russian hydrocarbon production.
The best indicator of sanctions’ lack of effect on the Russian oil industry is the steady growth of production in 2014–16, during which Russian oil companies have produced and exported more and more oil from quarter to quarter. During that period, Russian oil companies have also finalized a comprehensive investment in the refinery sector that allows a significant increase in processing depth.
Defense Industry Needs the West
Russia is one of the largest producers, consumers and exporters of weapons in the world. The technology gap with Western countries forced Russian industry to actively use imported components, especially for export contracts, while the technological cooperation inherited from the Soviet Union has created a greater dependence on Russian arms deliveries from Ukrainian supplies.
The scale of the Russian defense industry’s dependency on Western imports is not very large, being estimated at 8–10 percent. But this dependence is concentrated in the most important and technologically advanced areas. Deputy Prime Minister Dmitry Rogozin said that components from NATO and EU countries are used in 640 different models of Russian military equipment, mainly in electronics and optics. Of these, “We will have to replace 571 models [with Russian production] by 2018.” Deputy Defense Minister Yuri Borisov, who is in charge of military-technical support of the Armed Forces, gave slightly different numbers in a report to Putin on July 16, 2015, saying that by 2025, “We plan to substitute imports of 826 models of weapons and military equipment.”
The Russian defense industry’s dependence on Ukraine is concentrated in rocket and space, aircraft, and shipbuilding products, and is much greater. This dependence and the sanctions have led to disruptions in the supply of military products in 2015, particularly in production for the Russian Navy. During the summer of 2015, Putin held a series of meetings analyzing the situation in the defense industry, after which it was decided to change the structure of arms procurement, resulting foremost in a reduction of deliveries for the navy. Obviously, in the near future, other areas of arms purchasing may also be adjusted. For example, the production of the most modern Russian fighter, the Su-35S, involves a large number of imported components, which are not currently produced in Russia. The most serious dependency is in electronics, where Russia has traditionally lagged behind. In 2016, production of these aircraft will be completed using existing stockpiles, but this will be impossible starting in 2017, as supplies will be exhausted.
Today we cannot measure the seriousness of sanctions’ consequences for the Russian defense industry, as they are not so evident today. But in the coming years, those effects will evidently continue to grow.
How Effective Is Import Substitution?
Russian politicians, starting with Vladimir Putin himself, declare that they see Western sanctions not as a punishment but as an opportunity—for Russian businesses to build new enterprises and to take up new market niches. The idea of import substitution has become a popular topic for discussions, and a chance for many ministers and state corporations to receive funding from the budget. The government has established a special commission for this purpose, which analyzes requests for funding, prioritizes them and makes a decision about the form in which funding will be provided (subsidies, loans, direct financing, and so on).
The bulk of those projects are long-term and even if they are realized, their effect (if any) may only become visible in several years’ time. At the same time, Russian counter-sanctions (or embargoes on food from Western countries) are seen by Russian politicians as an opportunity to boost domestic agricultural and food production. Despite many reports on the success of this policy, statistical data provides a very weak and nonobvious foundation for this.
Yes, agricultural production grew in 2015 by 3 percent, while the economy in general fell by 3.7 percent. But the growth of agricultural production has been rather stable in Russia since 1999, averaging 3.3 percent per year (meaning 2015 was below average), with some fluctuations related to weather conditions.
The most significant and evident growth in 2015 was recorded in poultry and pork production (8.6 percent and 12.9 percent, respectively) but once again, this growth started in 1999–2000 and no acceleration was registered in 2015. Compared to those two champions, the situation in milk and beef production is definitely lagging behind: milk production is stagnating while growth in beef production was sluggish, and its level in 2015 was well below that of 2010. It is important to note that much of Russia’s meat production comes from small farmers and households, and is not going to the market but rather being consumed at home. And if we look at sausage production, the lack of any growth is evident.
Production of butter, cheese and the Russian cottage-cheese-like staple known as tvorog has definitely benefited from Russian counter-sanctions; acceleration there is sizable, and started in 2014, when Russian counter-sanctions were first declared. Nevertheless, according to Russian statistics, growth was recorded not in cheese production but in “cheese product,” a specially defined statistical entity that is produced with palm oil and contains no animal fat at all (imports of palm oil to Russia in 2015 increased by more than 40 percent over 2013). There is no such clear evidence in the production of butter and cottage cheese, while multiple reports in regional mass media demonstrate that the quality of much of their production is unacceptable. The poor quality of local dairy products has become evident across the country, forcing Rosselkhoznadzor (the Russian equivalent of the FDA) to issue a special information letter describing the problem and methods of control.
The clearest example of the counterproductivity of Russian counter-sanctions is fresh fish production. In 2011–13 this sector grew quickly, and seemed inclined to mimic the success of pork and poultry production. But when Russian counter-sanctions were imposed, the import of whitebait was prohibited as well. But whitebait production is a high-tech endeavor, and Russia was not able to substitute for it. As a result, in 2015 fresh fish production fell by 20 percent compared to 2014 (while production of frozen fish is growing steadily).
Russia Will Not Become Venezuela
It has become evident that the Russian economy can no longer rely on exceptionally favorable external conditions (further growth in natural-resource prices and increasing external corporate debt). In fact, the reverse is true: Western sanctions have aggravated Russia’s external environment. Given the country’s authoritarian political regime, the economic policy of the government has become completely dependent on Vladimir Putin’s personal views and his “economic doctrine.” A brief overview of its elements:
1. Putin does not support (or at least has not thus far supported) returning to a Soviet-style command economy. So far, the Russian president has not questioned the key element of a market economy: free-market pricing. Moreover, the Russian authorities are slowly but steadily liberalizing electricity and gas prices.
2. The same relates to the free floating of the ruble: after the CBR had spent 175 billion in 2008 and another 120 billion in 2013–14, Russian foreign exchange reserves were depleted, and after Western financial sanctions were imposed, Putin acknowledged and supported the position of the CBR to not spend a dollar more, supporting the ruble rate. Those two points are a dividing line between Russia and Venezuela, where the economic situation is very close to disaster though the bulk of the problems could be solved by transitioning to a free-floating exchange rate.
3. Putin remembers the 1998 crisis well. He was and apparently still is quite frightened by it. Having analyzed the causes of that crisis, Putin recognized the budget deficit as the main culprit. That is exactly why he believes that the budget deficit ceiling, set at 3 percent of GDP, is not subject to change. He is prepared to cut any expenditures over the short or medium term, but is not ready to agree to even a temporary and insignificant increase of the budget deficit, which will have no bearing on the macroeconomic situation in the country. For instance, he has rejected the underlying idea of the “Russia 2020” plan, based on temporarily increasing the deficit in favor of boosting expenditures on healthcare, education and science, after those items were displaced by military expenditures.
4. Putin supports dirigisme in economic policy. He believes the state to be infallible; thus, any government decision, restriction or regulation is always beneficial. For the very same reason, Putin tolerates lack of progress on systemic privatization (when the government steps out of the economy). Conversely, he accepts it when state corporations periodically acquire private enterprises from competitive sectors, even if they are outside of their dedicated sphere of interests.
5. Putin does not believe in competition and private-sector initiative. He does not view either of them as an economic engine, which is why he easily raises social security taxes and taxes on small businesses. For the same reason, he was reluctant to conduct economic amnesty, and then substantially curtailed it.
Forecasting the medium-term economic scenario for Russia, I do not want to read the fortune of oil prices, which constitute the factor most obviously capable of boosting or bursting the entire Russian economy. I take it as a given that the current level of oil prices (fluctuating between $35 per barrel and $50 per barrel) is sustainable for my horizon. If it is, then there are two cards in the hands of Vladimir Putin that may improve the situation in the economy: one is in foreign policy, another in domestic policy.
In foreign policy, the evident joker is Russia’s policy vis-à-vis Ukraine in general, and in the Donbass in particular. If Putin recognizes that Western sanctions are much more influential than he believed, and that their long-term negative effect is damaging the future of the Russian economy, he may decide to give up on the Donbass separatists and implement the Minsk II provisions. This will result in the removal of sanctions, which will grant Russian banks and companies access to capital markets. Moreover the government will be able (if needed) to borrow in Western markets itself, thus avoiding extra cuts in expenditures.
Moreover, within a year and a half to two after the removal of Western sanctions, many European companies will return to Russia to renew old investment projects or to launch new ones. Of course, we cannot anticipate an enormous inflow of foreign capital, but it could be enough to give the Russian economy 0.2–0.3 percent of additional growth per year.
As of today, I do not see much of a chance that Vladimir Putin is ready for this scenario. He would interpret giving up the Donbass amid the current situation as a political defeat and a concession to the West, and he is not ready to accept that he is weak. If the Russian economy does not deteriorate significantly—say, another 5 percent decline within a year and/or 30–50 percent devaluation of the ruble; I give very low chances for both—there will be no trigger for the Russian president to change his Ukraine policy.
In domestic policy, the fundamental problem that explains the downturn in the Russian economy is the demolition of the rule of law and property rights protection that has occurred in Russia in the last fifteen years. The consequence is a decline in investment activity. Declining investment in the Russian economy (excluding investments related to the Sochi Olympics) started in 2012. Private businessmen are concerned about property rights facing massive racketeering by security-service employees; on average three hundred thousand criminal investigations are launched against businessmen annually, and though only 2.5–3 percent of them get sentences, 85–90 percent of them lose their businesses. The restitution (or, more accurately, the implementation) of rule of law that will result in property-rights protection is not an economic, but a political goal, which is fully in Vladimir Putin’s hands. In many of his speeches, the Russian president has acknowledged that the legal system does not function properly in Russia and that the activity of law-enforcement agencies should not be hostile to business, but in real life, the situation is worsening from year to year.
I do not believe that Vladimir Putin will launch a comprehensive political reform to include political competition, fair elections, fighting corruption, and radical transformations in law enforcement and the legal system. He understands very well that even minor steps in this direction will inevitably lead to losing of his grip on power and personal control over the country, and ultimately to the collapse of his regime. Vladimir Putin is a gambler in politics, as he once was in his private life, but he is not committed to political suicide. His examples of worst-case scenarios in political leadership are Viktor Yanukovych, the Ukrainian president who was removed from his post by the parliament, and Mikhail Gorbachev, the president of the USSR who lost power and allowed the country to collapse. Vladimir Putin will do his best to avoid these two scenarios from being repeated with him in a starring role.
If these two key factors that may improve the foundation of the Russian economy, in foreign and domestic policy, are not engaged, the economic situation in Russia will remain gloomy. Lacking investment growth, 2 percent growth will be the dream, while on average the growth rate will not exceed 1 percent per year, and in fact from time to time dip below zero. The two centerpiece questions of the economic policy will remain focused on the budget: (1) Will Putin continue to support the limit on the budget deficit at 3 percent of GDP? In other words, will he be ready to sacrifice households’ living standards and the quality of the public sector, since limiting the deficit in a stagnating economy will require further cuts or underfinancing of public expenditures, and/or increasing the tax burden? Moreover, the Ministry of Finance and Alexei Kudrin have demanded loudly and publicly to cut the deficit by up to 1 percent within three years, which will require even stronger budgetary consolidation. (2) As the Ministry of Finance is banned from borrowing in Western capital markets, and is constrained by the lack of long-term capital in Russia, it cannot use its borrowings to finance the deficit while the stock of assets for privatization is limited. For the coming two and a half years the deficit (if it remains at 3 percent) could be financed by reserve funds, which should be depleted by the end of 2018. Will Putin allow the monetary financing of the Central Bank (in one form or another) to be used on a permanent basis? Such financing took place in 2014–15, being equal to 0.5–0.8 percent of GDP. But such a proposal, being bigger in size, will undermine the job of the CBR in fighting inflation and will distort macroeconomic fundamentals.
I would not say that the Russian government utterly lacks tools that may be used without radically changing the political landscape, and that may improve (albeit slightly) the economic situation. For example, the Russian government may enforce competition in the oil sector by facilitating the activity of small companies, which produce less than 10 percent of oil in Russia (compared to over 50 percent in the United States), or in the gas sector by spinning off the pipeline system from Gazprom and providing all gas producers with equal access to its capacities. Experts, led by Alexei Kudrin within his job at the presidential economic council, will definitely furnish other ideas, as many of them believe that the situation in the Russian economy may be improved by small steps without radical reforms. I doubt this, and believe that even the effects of positive decisions without political change will be significantly eroded and thus limited.
Concluding my forecast, I want to reemphasize that there is no reason for an economic collapse in Russia, but neither are there any signals that the Russian economy can avoid a long period of stagnation/sluggish growth. There is no space for a catastrophe compared even slightly to 1991–92, when the Soviet Union collapsed, though the Russian people’s standard of living Russian people may deteriorate further. But in the long run, lacking political reforms, the Russian economy will be much less competitive and less attractive.
Sergey Aleksashenko is the former first deputy chairman of Russia's Central Bank and a former deputy finance minister.
Image: Russian rubles. Wikimedia Commons/Petar Milošević.