How to get ready for new sanctions?

What better protects against external shocks, stable economy or developed financial infrastructure?  Is it possible to prepare for fall in oil prices or for new sanctions?These issues were discussed on November 22 during a live TV program “Business day” on RBC channel with the participation of Mikhail Khromov, Head of Financial Studies Department of the Gaidar Institute.How resistant is Russian financial system against a number of new shocks that are likely to appear if USA will introduce a new round of sanctions or if the oil prices will fall?

According to Mikhail Khromov, the 2014 external economic shock split into two factors, i.e. falling in oil prices and the first stage of sanctions. Consequently, reduction of export revenues sharply deteriorated trade balance and introduction of sanctions shut off external capital raising channels. The sanctions scenario smoothly toughening since 2014 blocked the access of the Russian financial system towards borrowed external resources.

As a matter of fact, this is an advantage for resistance because there will be no capital outflow and shocks that were experienced in 2014, when there was nothing to do but to borrow back. However, there are still segments of external debt present, which have not been subjected to sanctions. For the time being, major threat is the restrictions on the Russian sovereign debt investment. These restrictions can lead to the next stage of destabilization of Russian financial system in a format of significant growth of rates of interest even at the internal market if all non-residents will hastily get out of the existing debt or there will be any extreme measures of non-market nature introduced  because it will be practically impossible to stop the outflow of non-residents using market methods.

One may find out the opinion of other guests if they watch TV Program “Business day”.