Mishustin vs the Central Bank

NEW – May 24, 2022

Apparently, the Central Bank declared war on Mishustin. And it is precisely Mishustin, not the government, because at least one important member of the government, Finance Minister Siluanov, is clearly on the side of the Central Bank in this war.

This war began when Mishustin, who is in charge of the President of Russia for development, discovered that he clearly lacked resources. This is understandable, the investment path in Russia is blocked in at least two of the three directions. Domestic private investment is effectively prohibited by monetary policy, which provides for financial speculation a return of at least 15% higher than for investments in the real sector (ie, in fact, investment).

Due to sanctions, foreign investments, which used to go only to certain sectors of the economy, have stopped altogether. And only budget investments remained, the potential of which Mishustin has already used almost 100%. If not more (taking into account different public-private partnerships). As I described in earlier, the government decided that lowering the discount rate would improve the situation a bit, but the Central Bank was silent at first, like a communist during interrogation, and then announced that it might (!) reduce something by the end of the year. Or maybe not.

But such passive action did not seem enough to the leadership of the monetary authorities. Rising world prices for raw materials have provided a fairly high budget surplus, and the withdrawal of revenues outside the Russian economy has stopped. Well, that is, the Central Bank would continue to bring the potential resource of development away from our economy, but then it was hindered by the well-known political circumstances. A more subtle move was needed. And it was found.

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It is well known that the devaluation of the ruble increases the budget surplus. For this reason, the Ministry of Finance has always tried to devalue the ruble – which provided additional income by the end of the year. And here there is a chronic surplus, which can not even be transferred to next year, because the crafty Mishustin last year decided that the money should be spent “here and now”! That is, you will not be trusted, send them to investment!

The idea of ​​this is so contrary to the logic of the monetary authorities of Russia (that is, the leadership of the Central Bank and the Ministry of Finance) that they came up with a wonderful move: we need to revalue the ruble! That is to raise its rate against the dollar. Theoretically, this can be useful for those who buy equipment (because its value in rubles is falling), but given the cost of capital, such maniacs are few. There is money only in the budget. But here the Central Bank begins to raise the ruble and as a result the money from the budget will magically disappear. And, perhaps, they will not even be enough for all the already adopted investment plans of Mishustin, let alone for the new ones!

In general, I would say that the persistence of Nabiullina and Siluanov is sincerely admired. But, from the point of view of the political power, it is time to enlighten the mad(wo)men who purposefully do not allow our country, neither private entrepreneurs, nor the state to develop. Actually, if I were asked to qualify these actions, I would call it undermining the foundations of the country’s existing political system. Well, or, more simply, I would call them enemies of the people. But I am a private person, my opinion is not fundamental. But the Prosecutor’s Office or the Investigative Committee (not to mention the FSB Investigation Department) could take an interest in the situation. As they wrote in Soviet times, please consider my text as an appeal to the appropriate authorities.

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Mikhail Khazin

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