The Moscow financial forum at WTC Moscow

The discussion focused on the economic situation in Russia and Moscow as a result of the COVID-19 pandemic and the assessment of its prospects.

According to recently announced data from BCG, Moscow is named among the megalopolises that have achieved the highest results in overcoming the situation with COVID-19. Among the main indicators are the speed of government action, the availability of hospital beds for patients in the health system, a set of measures to isolate the population and identify potential disease outbreaks, as well as timely and regular communication with the population.

Mr. Sergei Sobyanin noted that all sectors in the city were hit at the same time. Moscow had sufficient resources and capabilities to cope with the situation, and the authorities are very grateful to the government of the Russian Federation for numerous support measures. The difficulty of making decisions in this situation was that it was not straightforward. It took a whole set of compromise measures.

Neither the example of China, where troops were deployed in the city to ensure order, nor the example of Sweden, where the main emphasis was on maintaining the economic component despite the epidemic, were suitable for Moscow.

Sergei Sobyanin emphasizes that the main thing is to continue to observe the mask regime, especially in transport, and also in trade. At the beginning of the pandemic, the main problem was the lack of medicines and masks. And today these problems are solved, and vaccination will become massively available in December and January.

Mr. Anton Siluanov commented that no one was prepared for such a situation, and in order to maintain economic stability, it was necessary to increase borrowing, use the funds of the Russian National Wealth Fund and find significant funds for social support, for the re-equipment of medical institutions to provide treatment for this particular disease. It is necessary to emphasize business support measures, both direct and via banking instruments. But, according to him, we can say that today the situation with the growth rate of the economy is one of the best. Unemployment remains at 6.3%, compared to the United States, for example, where this figure reached 15%. Both industry and consumer demand are gradually recovering, and according to preliminary data, the fall in the economy should not exceed 4% this year. Starting from 2022, the Ministry of Finance will adopt the budget rule (a 3-year plan has been prepared) and investors can see that the economic situation is quite stable, which is very important for the country's positioning. State support measures should be reduced in proportion to the business recovery from the crisis.

Despite expectations, Bank of Russia avoided raising the key rate, and even managed to lower it further. The situation in the country's economy at the beginning of the crisis was comprehensively stable, which allowed maintaining a countercyclical policy. Everything pointed to the fact that the disinflationary risks will prevail. In March 2020, severe financial stress on world markets reflected in countries such as Russia. However, this process was quickly stopped. Thanks to the economy's safety margin and numerous state support measures, the Ministry of Finance managed to insure soft monetary policy. According to Mrs. Nabiullina, changing the inflation targets depending on a current situation is wrong, it can undermine confidence in the monetary policy.

Mr. Andrey Kostin noted that this is the first crisis when no bank has gone bankrupt in Russia. On the contrary, banks have become participants in business support. In this case, VTB Bank acted as a conduit between the state and business. Bank of Russia played a major role in the stability of the banking sector. Of course, a wave of problems related to general population and the corporate sector has reached the banks, but in fact, it cannot be said that during these crisis months, the level of borrowing in banks have changed significantly. For example, in VTB, it increased from 4.7 to 5%, so there are no special concerns today, according to Kostin,.

However, Andrey Kostin expresses concerns that today it is necessary to find funds for development. "When you have smaller margins, you need to increase your balance sheets, especially in the conditions of rehabilitation, which is out of the question." The third important point is to continue public-private partnership. A number of infrastructure projects - an example of the success of PPPs, but today these issues are given less attention.

The service sector, especially tourism and the hotel sector, is recovering weakly. According to Sergei Sobyanin, the situation will be resolved in 1.5 years, and what has happened - will gradually be forgotten. But, according to him, real estate market and the city are different things. E-Commerce, for example, has been developing successfully for a long time, as business is "adapting" and creating new forms of work, new products and services. In his opinion, the problem is more relevant to 2021, since, for example, the difference between the budget that was planned and that will be formed will actually amount to 12-15%, which is a very high figure. But there is no possibility to reduce the budget, social spending, and salaries, so it is likely that investment spending on infrastructure will have to be reduced, which in turn will lead to a loss of income in subsequent periods. 

According to Anton Siluanov, the situation in the federal budget is similar. With low debt and increased borrowing, new development funds will be needed. Therefore, borrowing should only occur at low rates, and previously planned budgets should be reasonably reallocated.