The Central Bank raised the base interest rate, the first time in history the foreign debt/GDP ratio dropped to this level

The Central Bank of Russia (BR) issued a statement on October 27 stating that it has decided to increase the basic interest rate by 2%, to 15%/year.

Ngân hàng Trung ương Nga tăng lãi suất cơ bản

The Bank of Russia has just announced an increase in the basic interest rate by 2%, to 15%/year.

It should be noted that inflationary pressures in the economy have been higher than expected by the Central Bank of Russia.

Earlier, First Deputy Chairman of the Board of Directors of the Foreign Trade Bank of Russia (VTB) Dmitry Pyanov reiterated the Central Bank's inflation forecast for 2023 at 6-7%, while current figures show that actual inflation is already higher than this level.

Immediately after the decision, the Russian Ruble increased in value in transactions at the Moscow Exchange. As of 13:30 (Moscow time, ie 17:30 Hanoi time), the USD decreased by 1.13%, to 92.9 Rubles for 1 USD, while the Euro was traded at 98.19 Rubles for 1 Euro, (down 1.41%), and the CNY was at 12,653 Rubles for 1 CNY (down 0.98%).

Before the announcement of the above decision, at 13:25, the USD had decreased by 0.67% to 93.32 Ruble/USD, the Euro decreased by 1% to 98.59 Ruble/Euro and the CNY was at 12.716 Ruble/NDT (down 0.49%).

Meanwhile, for the first time in history, Russia's foreign debt-to-GDP ratio fell below 15% in the second quarter of 2023. Per capita debt fell to $2,300, the lowest level since 2006.

As of the end of the second quarter of this year, Russia's foreign debt stood at 343.4 billion USD (about 29,900 billion Rubles) or 14.96% of Russia's GDP.

The Russian news agency RIA Novosti reported the figures based on BR data in the second quarter. But in the third quarter, Russia's foreign debt fell by another 4%, to $329.5 billion.

Since the beginning of the year, Russia's debt-to-GDP ratio has fallen to 14.1%.

The Russian central bank previously explained the decrease in foreign debt as “a reduction in equivalent USD debt repayments due to the weakening of the national currency against the USD, as well as a decrease in the volume of foreign holdings of Russian sovereign bonds, including their planned repayments.”

Russia's foreign debt has been decreasing over the past few years, with the ratios being: 2020: 31% of GDP, 2021: 26.2% of GDP, 2022: 16.6% of GDP.

Source