Russian fiscal space: in-depth analysis of Russian public debt, constraints to medium-term sustainability and macroeconomic consequences

Project

7 Oct 2024 - ongoing

Marek Dabrowski

Katsiaryna Kasykh

Date:

7 Oct 2024 - ongoing
Client: European commission DG for economic and financial affairs:
Project Leader: CASE – Centre for Social and Economic Research :

Marek Dabrowski
Expertise:  Background: Current Positions: Previous Positions: Dr Marek Dabrowski is a Non-Resident Scholar at Bruegel, Brussels, Co-founder and Fellow at CASE – Center for Social and Economic Research in Warsaw, and Visiting Professor at the Central European University in Vienna. He was a cofounder of CASE (1991), former Chairman of its Supervisory Council and President … <a href="https://case-research.eu/project/russian-fiscal-space-in-depth-analysis-of-russian-public-debt-constraints-to-medium-term-sustainability-and-macroeconomic-consequences/">Continued</a>

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Katsiaryna Kasykh
Katsiaryna Kasykh is an experienced project and program and manager with over 18 years of expertise, specializing in territorial and cross-border cooperation program and project management, territorial marketing, ecology, sustainable development, area-based development, and humanitarian aid projects. She has successfully implemented numerous social and humanitarian projects, combining her skills in strategic planning and management with a deep commitment to fostering collaboration across regions. Ms. Kasykh holds a MA degree in Management and Economics from Brest State Technical University and a postgraduate diploma in Customs Law from Belarusian State University. For over 15 years she was on managerial position in NGO Sector in Belarus. Her professional background includes leading roles in designing and managing large-scale initiatives funded by local and international donors (incl. EU, UN,UNDP, UNHCR,USAID), with a focus on environmental issues, sustainable development, and community-led projects. Additionally, Ms. Kasykh has extensive expertise in Eastern Partnership programs, working on cross-border cooperation strategies and contributing to regional development initiatives. Her work in developing regional development strategies, overseeing cross-border cooperation programs, and delivering impactful area-based development projects demonstrates her ability to create solutions that address complex regional challenges while promoting ecological and social sustainability.

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The strong rebound of the Russian economy in 2023 and the first half of 2024 is to a substantial extent owed to sizable fiscal support, both in the form of military expenditure and other, such as the subsidised mortgage scheme. Russia’s continued ability to finance its war effort and fiscal stimuli is critical for its short- to medium-term macroeconomic performance.

On the surface, standard metrics, such as debt-to-GDP, fiscal deficit, and National Wealth Fund levels, suggest a benign fiscal picture overall. However, some analysts have pointed to idiosyncratic elements of the Russian economy that make the debt constraint more binding than usually thought. Among them are limited access to international money markets, less investor trust and constraints on taking on domestic debt due to macroeconomic trade-offs, e.g. with respect to inflation, as well as considerations of political economy.

The purpose of this project is to re-evaluate the currently widely accepted view of ample Russian fiscal space in the short- to medium-term and shed light on the factors that could make the fiscal picture more challenging than normally assumed. This includes a discussion of other avenues for public financing, such as debt monetisation, in the Russian case with respect to their ease of implementation and potential ramifications. The research question is of central importance to the assessment of short- to medium-term growth prospects for the Russian economy. There is until now limited literature available on this topic in the context of the Russian war economy. The resulting publication, that may be published as an ECFIN Discussion Paper, would therefore be of great use to future work by the Russia desk of DG ECFIN’s unit D.4, which is tasked with monitoring and forecasting the Russian economy.

The report will incorporate both analytical and quantitative analyses where the quantitative work should serve to substantiate and corroborate the analysis. The study includes two parts:

Part I is to explain and elaborate on Russian fiscal policy, public debt, and its idiosyncrasies – both current and historic. This is not be limited to topics and phenomena directly linked to fiscal policy, but also related topics such as central bank independence and inflation.
Part II should follow up on this by discussing the Russian fiscal space in the short- to medium-term and its sustainability from the perspective of macroeconomics and (where adequate) political economy.

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Russian fiscal space: in-depth analysis of Russian public debt, constraints to medium-term sustainability and macroeconomic consequences

Date:

Client: European commission DG for economic and financial affairs:

Project Leader: CASE – Centre for Social and Economic Research :

Marek Dabrowski

Projects from this author:

Katsiaryna Kasykh

Projects from this author:

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