According to Vedomosti, Igor Shuvalov, the first deputy prime minister, yesterday held a meeting on measures to boost economic growth. MinEconomy presented its proposal, which is to be taken as a core for the final proposition from the government. MinEconomy suggested four ways to stimulate growth:
Include a growth target in the CBR's mandate. The CBR's rates would be reduced and kept at an adequate level. The regulator would also publish indicative lending rates that might contain the cost of funding in the real economy.
Improve the investment climate.
Infrastructure projects: Moscow's transport hub, Baikal-Amur Mainline, Trans-Siberian railway, high speed Moscow-Kazan, new power generation in the Far East. These projects would be financed from NWF via infrastructure bonds.
Support of those sectors that are the most vulnerable to WTO framework. The final MinEconomy proposal is to be delivered to the government on 13 May.
This year, we believe that monetary easing and infrastructure investments will be the key drivers of economic growth.
The idea of expanding the CBR's mandate to include a growth-goal is not new and was raised recently by Shuvalov. We expect the CBR to preserve its independence: while preparation of the new Central Bank law is important, and, as a result of this process, we might see modifications to the CBR's current framework, we do not expect it to catch the market by surprise. Discussions on the CBR’s goals will continue, but we believe that low and stable inflation will sooner or later be introduced in law as the primary goal, as we believe that this is the main precondition for strong economic growth. Growth goals might be added, but only as secondary targets.