Front Matter Page
© 2011 International Monetary Fund
September 2011
IMF Country Report No. 11/295
This selected issues paper on the Russian Federation was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on August 4, 2011. The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of the Russian Federation or the Executive Board of the IMF.
The policy of publication of staff reports and other documents by the IMF allows for the deletion of market-sensitive information.
Copies of this report are available to the public from
International Monetary Fund • Publication Services
700 19th Street, N.W. • Washington, D.C. 20431
Telephone: (202) 623-7430 • Telefax: (202) 623-7201
E-mail: publications@imf.org Internet: http://www.imf.org
International Monetary Fund
Washington, D.C.
Front Matter Page
INTERNATIONAL MONETARY FUND
RUSSIAN FEDERATION
Selected Issues
Prepared by Charleen Gust, David Hofman, Daehaeng Kim, Nandaka Molagoda, and Daria Zakharova (all EUR)
Approved by the European Department
August 4, 2011
Contents
I. Leading Indicators for Inflation in Russia
A. Introduction
B. Core Inflation
C. Inflation Forecasting: Leading Indicators Model
D. Policy Implications
Boxes
1. Core Consumer Price Index in Selected Countries
Text Figures
1. CPI Inflation, Fixed-Weight Approach
2. CPI Inflation, Fixed-Standard Deviation Approach
3. Core Inflation Rates, 12-Month Rate
4. Core Inflation Rates, Month-on-Month Rate
5. Twelve-Month Ex-Post Forecasts
6. Six-Month Ex-Post Forecasts
7. Inflation Forecasts for 2011
8. Inflation Forecasts for 2011 with WEO Global Assumptions for Food Prices
Appendix
I. Statistical Properties of CPI Components and Trimming Method
References
II. Improving the Monetary Operations Framework of the Central Bank of Russia
A. Background and Motivation
B. The Current Framework
C. Problems with the Current Framework
D. Improvements to the Framework
E. Upgrading the Framework while Tightening Policy
F. Complementary Policies: Dealing with Capital Inflows
Annex
I. Monetary Policy Instruments of the Central Bank of Russia—Suggested Simplification
References
III. A Financial Conditions Index for Russia
A. Introduction
B. Methodology
C. Constructing the FCI for Russia
D. Estimation Results and FCI
E. The FCI Versus the MCI
References
IV. Strengthening Russia’s Fiscal Framework
A. Summary
B. Introduction
C. Best Practices
D. How Russia’s Current Fiscal Framework Compares to Best Practice
E. Recommended Improvements to the Framework
Boxes
1. Automatic Stabilizers
2. The Role of MTFFs in Managing Oil Revenue Uncertainty
3. Long-Term Fiscal Risks in Russia
4. Fiscal Rules: POIM Rule vs. Oil-Price Rule
5. Alternative Specifications for Anchoring Long-Term Fiscal Policy in Russia
6. Russia’s Oil Funds
7. Replenishing the Reserve Fund
Figures
1. Traditional and Nonoil Fiscal Indicators, 2004–10
Tables
1. Best Practice vs. Russia’s Fiscal Framework
2. Some Examples of International Experience
Appendix
I. A Permanent Oil Income Model (POIM) for Russia
References
V. Is Russia’s 2011–13 Budget Growth-Friendly?
A. Introduction
B. The Model
C. The Growth Impact of the 2011-13 Budget and an Alternative Consolidation Package
D. The Impact of Further Consolidation
E. Conclusions and Recommendations
Boxes
1. Fiscal Instruments in GIMF
2. The Role of Credibility in GIMF
Tables
1. Consolidation Measures in 2011–13 Budget
2. 2011–13 Budget Consolidation Measures by GIMF Instrument
3. Potential Fiscal Savings
4. Additional Budget Consolidation Measures by GIMF Instrument to Reach Nonoil Deficit Target
Appendix
I. Model Results
References