Following Russia’s invasion of Ukraine, the United States, Britain and other Western nations have imposed new sanctions targeting Russian banks, sovereign debt and individuals.
Siluanov said Russia’s economic and financial situation was stable in general but conceded that sanctions will change the country’s borrowing plan, requiring it to tap the National Wealth Fund, which stood at $175 billion as of Feb. 1.
“Due to an increase in borrowing costs the issuing of state debt has been suspended. We are planning to reduce the amount of borrowing this year, will utilise NWF funds for it,” Siluanov told a meeting with government officials.
As Russian missiles pounded Kyiv, authorities in Moscow were seeking ways to shield the economy from new penalties that sent the rouble to a record low, threatening living standards already hit by high inflation.
The finance ministry said it will offer only a new series of OFZ government bonds and stop offering existing series of debt as the U.S. government slapped restrictions on trading of Russian government debt.
The Russian central bank beefed up the banking sector with extra liquidity and started to sell foreign currency on the forex market after the rouble fell to all-time lows on the day Moscow sent its troops into Ukraine.
The central bank’s forex interventions that it started this week for the first time since 2014, when Russia annexed Crimea from Ukraine, have already born fruit, Vladimir Chistyukhin, central bank deputy governor, said at the same meeting.
“We have a serious safety margin from the financial stability point of view… The central bank is ready to support banks with liquidity,” Chistyukhin said.
Siluanov said swings on the foreign exchange market were temporary and there was no immediate risk to financial stability.