The constant emission of money in the economy threatens to increase inflation and negatively affects the real income of the population, said Russian Finance Minister Anton Siluanov during the plenary session of the Moscow Financial Forum.
“The economic law cannot be fooled. You can’t constantly print money and not pay for it, because who pays for emissions, for large deficits, for high inflation? First of all, our citizens, and first of all those who have low incomes. Therefore, the continuation of such a policy is clear that this is a dead-end path, ”he said.
Siluanov discussed whether a soft budgetary and monetary policy leads to “pumping up the economy”, whether it stimulates economic growth. As an example, the head of the Ministry of Finance cited Canada, whose budget, according to him, in 2020 increased by 1.5 times, while inflation rose, and GDP fell by more than 5.5%. A similar situation has developed in Turkey, where consumer prices have increased by 19%, and the national currency has fallen in price by a quarter.
“And what is this result, which, one might say, gives positive effects? Well no. Everything is very necessary (to do – Ed.) Really dosed, balanced, calculated. Any mistake here has consequences for the income and well-being of people who live in this or that country, ”the minister summed up.
Siluanov noted that the Russian authorities “tried to be very balanced in their approach to the use of monetary factors” and to budget spending. “It is no coincidence that now, when preparing the budget for the next three years, we are reaching normal levels of the budget and budgetary policy,” he said.
Earlier, the chairman of the Bank of Russia Elvira Nabiullina said that the emission of money and distribution of it to the population would lead to an explosive rise in inflation. “Helicopter money”, she said, will provoke a situation reminiscent of the 1990s, and it will be difficult to buy anything for banknotes issued by the Central Bank, because payments will be devalued by rising prices.
In early May, Siluanov said in an interview with Vedomosti that it would be possible to “throw money from a helicopter” if Russia were to print reserve currencies. Under the current conditions, the country cannot afford this.
The Russian authorities pursued a soft monetary policy in 2020 and early 2021 amid the coronavirus pandemic. However, against the background of accelerated inflation, which in July amounted to 6.46% in annual terms against the target of 4%, the Central Bank began to raise the key rate. Now it is at 6.5% after 4.25% in March. According to experts, at the meeting on September 10, the regulator will once again increase the rate.
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