Putin Tells His Economic Team To Crack Down on Speculation and Capital Flight

Aug. 23, 2023, 2022 (EIRNS)—Even while his speech to the BRICS Business Forum was being heard in Johannesburg, Russian President Vladimir Putin was busy in Moscow discussing the Russian economy with his advisers. The President had a meeting with the Council for Strategic Development and National Projects on inflation and ruble volatility, and demanded control of capital flight from Russia, which has played a role in the recent sharp devaluation of the ruble.

“Volatility has grown considerably in the financial markets in recent months,” Putin stated.

“We are well aware of this. Obviously, these fluctuations make it more difficult for businesses, companies and individuals to make investment decisions. The government and the Bank of Russia should step up their use of the available instruments and adjust them with this objective situation in mind. It is also necessary to work on limiting the unproductive, speculative demand in the economy, control capital outflow and monitor the actions of the main participants in the financial market.”

Putin acknowledged divisions within the government and central bank, and said, “But we have always found a consensus so far, and we will find it now.” A return to capital controls, such as the previous requirement for exporters to repatriate 80% of foreign exchange earnings to Russia, may be imminent.

Putin also reported on the recent improvements in the Russian economy, but said that increased productive credit inside Russia was required, including what he called “long money.”

“As you may know, in conjunction with the government, the Bank of Russia has drafted a program that stimulates the funding of technological sovereignty projects and projects for structural adaptation of the Russian economy, including such industries and sectors as mechanical engineering, microelectronics, the medical and pharmaceutical industries, to name a few. To reiterate, these initiatives should enjoy additional support from the banking sector and the development institutions....

“Creating ‘long money’ in the economy and the banking system is a separate issue. We have been discussing this for many years now. The issue is about creating a resource for financing ambitious, complex projects with an extended payoff period that can guarantee good return on invested funds and revenue that will last a long time.”

At the Council meeting, Minister of Finance Anton Siluanov reported, according to TASS, that “one-fourth of all investors in state securities have been forced to leave the Russian market due to sanctions. ‘We see that a considerable part of financial investors, foreign investors, have left the market. I would like to say that regarding investments in state securities alone those are one-fourth of all investors. Moreover, there were also investments in enterprises, entities,” he said.”