Neither the Ministry of Finance nor the Central Bank of Russia has an Explicit Policy of Limiting Dollar Loans

9 august 2017 | RBC

The share of the dollar in Russia's external debt has fallen to a minimum since 2014, RBC reports. "Government loans show the largest decrease in the share of the dollar: in Q1 2015 it was 51%, Q1 2016 — 43%, while the latest figures show only 28%. Nevertheless, neither the Ministry of Finance nor the Central Bank of Russia has an explicit policy of limiting dollar loans," the Analytical Center's expert Daniil Nametkin told RBC.

Daniil Nametkin
Daniil Nametkin
Department for Expert Analytics

The government's focus on the ruble has grown by 1.5 times in two years — now the share of the ruble in Russia's external debt is 70% against 45% in Q1 2015. One of the main reasons for the reduction of the dollar's role in external loans is risk management, explained Nametkin. State owned companies, particularly those subject to international sanctions, change their portfolios — and do that not in favor of the dollar, increasingly preferring the ruble. "For instance, the external debt structure may have been influenced by Rosneft's bond issue: placement was carried out in rubles, so part of the issue could have been made through external loans," the expert specified.

"The government does not interfere with companies' debt policy unless it is related to large loan projects. It is more a question of financing though. There are government recommendations on the portfolio: it should be either 50% rubles and 50% foreign currency, or a 30% share for each — rubles, dollars and euros," Nametkin added.

Banks stand apart: according to the Central Bank, 60–70% of their external debt is in dollars, 12–13% are in euros, and about the same share is in rubles. The expert believes, however, that banks will also be more focused on the ruble. Due to the tightening of the Central Bank's policy, banks are less likely to issue foreign currency loans (CB has a policy of discouraging lending in foreign currency), which reduces their need for the dollar and the euro, the expert explained.

Source: RBC

Picture from open sources