At the plenary session of the Eastern Economic Forum, the Russian president outlined key guidelines for current macroeconomic policy. The main thesis is that the fight against inflation is yielding tangible results, and the regulator and the government are managing to solve this task without the risk of overcooling the economy. As of August 31, annual inflation slowed to 6.3%, confirming the effectiveness of the chosen course.
A fine line between cooling and stagnation
In his speech, the head of state emphasized that the reduction in price pressure is the result of deliberate work by the Central Bank and the Cabinet of Ministers. However, the key challenge is not to overdo it with tightening conditions. The volume of investment has indeed declined, and this is a direct consequence of the high key rate. The authorities were aware of this risk from the very beginning and acted with it in mind.
Putin acknowledged that there is no consensus among experts on further steps: some propose moving to an active phase of economic growth, while others insist on caution. According to him, discussions could go on endlessly, but the main goal remains creating a favorable environment for private capital. It is private investment, not state resources, that should become the driver of development.
Budget deficit and debt burden
Separately, the president addressed the state of the federal budget. The deficit is acknowledged, but it is not critical against the backdrop of one of the lowest levels of public debt in the world. Instead of simple austerity, the authorities are betting on the rational allocation of funds and clear prioritization of expenditures. Putin warned of the risks of excessive borrowing on the domestic market: if the financial system, especially private banks, is overloaded, businesses will be left without access to money.
Budget dynamics, according to him, are wave-like in nature — periods of surplus alternate with deficits. We are currently observing the second phase, but the government is confident in gradually resolving these issues. The regulator is managing to balance between strictness and stimulation, and this is already bearing fruit.
A new model for financing PPPs
An important announcement was the instruction to monitor the operation of the concession bond mechanism. This model is designed to attract so-called long money into infrastructure projects under public-private partnerships. The shortage of long-term financing remains one of the main barriers to large-scale initiatives.
Let me remind you that last year at the EEF, VEB and Sber signed an agreement to create a new PPP financing scheme involving institutional investors. This refers to a two-stage model involving the issuance of a new type of securities — concession bonds. Now the task is to test this structure in real conditions and, if necessary, fine-tune the mechanisms.
My view: The slowdown in inflation to 6.3% is a positive signal, but the rate remains high, and this is restraining business activity. The success of the new concession bond model will depend on investor confidence and the market's readiness to absorb long-term instruments without losing liquidity. This is a long road, but without such mechanisms, an infrastructure breakthrough is impossible.