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V. Vasiliauskas: Russian economy showing signs of recovery, but they should be viewed with particular caution

April 21, 2017

Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania, who is attending International Monetary Fund (IMF) meetings in Washington, during a meeting with Ernesto Ramirez Rigo, IMF Mission Chief for Russia, will discuss this country’s economic development, latest projections, and potential impact on world economies.

‘The insights of IMF experts into the state of the Russian economy are interesting and relevant to us, as Lithuania is still linked to this country through close economic relations: Russia continues to be our largest export market,’ says Vasiliauskas. He believes that while, after two years in a recession, the Russian economy is showing signs of recovery, our businesses should view these signs with particular caution. The Governor of the Bank of Lithuania holds the view that ‘what we are observing in Russia is rather economic cycle-related recovery, with the largest contribution to it stemming from higher oil prices, while this trend may reverse’.

Vasiliauskas notes the expert assessment of international financial authorities that the saving programme conducted in Russia, aimed at stabilising the state budget, is necessary, but this measure alone is not enough. The country’s economy requires essential reform, which would reduce its reliance on the prices of natural resources.   The IMF notes that the highest risks stem from the lack of sustainability in the pension scheme, tax exemptions, and insufficient investment in human capital. The IMF projects that Russia’s economy will grow 1.4 per cent this year (compared to –0.2% last year).

The Governor of the central bank of the Republic of Lithuania is a Member of the Executive Board of the International Monetary Fund and attends meetings organised by the IMF in Washington, where governors of the central banks of a number of countries and Finance Ministers discuss relevant economic issues and search for ways to accelerate economic development. Vasiliauskas will meet with the IMF Mission Chiefs for the USA, Belarus and the euro area, the Governor of the National Bank of Ukraine, and will discuss relevant issues.