WASHINGTON, February 9. /TASS/. The executive directors of the International Monetary Fund (IMF) praised the measures the Russian authorities had taken in response to the economic crisis caused by the coronavirus pandemic. This is according to the report the IMF released on Tuesday.
"Executive Directors commended the authorities for a sizeable response to the crisis which should help put a floor on the downturn and limit scarring," according to the report.
The executive directors also stressed that Russia’s national projects should be used as an opportunity to tackle structural bottlenecks, which hold back the national economic growth.
The executive directors welcomed legislative efforts to expand the Bank of Russia’s" macroprudential toolkit."
"While a recovery is expected to take hold in the second half of 2021 as vaccines become more widely available, short term risks remain tilted to the downside given the global pandemic situation and geopolitical tensions," according to the report.
"While the economic recovery later in the year would allow for withdrawal of fiscal support, Directors called on the authorities to remain vigilant for as long as the situation remains fragile, and to stand ready to extend support if needed," the IMF said.
According to the IMF leadership, if downside risks materialize, Russia "should use its substantial fiscal space to deploy stronger support."
The executive directors praised the authorities’ growth-friendly tax reforms and welcomed monetary policy loosening in 2020 and the introduction of new liquidity instruments. They recommended that domestic fuel consumption subsidies be gradually phased out, while cushioning the impact on vulnerable groups.
They saw "room for additional monetary accommodation amid significant economic slack to prevent inflation from sliding below target as one-off shocks dissipate," and saw "merit in the authorities’ current wait and see approach."
The executive directors underscored the appropriateness of foreign exchange operations to address disorderly market conditions, and recommended that these be clearly separated from operations under the fiscal rule.
"Directors noted that increasing potential growth and reigniting income convergence with the advanced economies requires far-reaching structural reforms. They underscored the continued need to reduce the footprint of the state, improve the business climate, increase competition, address governance shortcomings and take steps to reduce the regulatory burden," according to the report.