Moreover, the Finance Ministry suddenly appeared in the forgotten over the last four years a situation when funds from the national welfare Fund (NWF) no longer need to spend on financing the budget deficit, and Vice versa, you need to find a way to translate additional income into foreign currency and thus does not unbalance the currency market. The budget deficit in just over six months or a year turned into a surplus, and a reasonable question arises: whether it is necessary generally to borrow money in the market, if the tasks to cover the deficit already gone?
It should be noted that the market of public debt performs an important macroeconomic function of forming long-term interest rates. But as shown by the relatively short crisis period (last 3-4 months), the rates for BFL were moving up or down depending on the appearance/disappearance of new sanctions or threats of a rate hike by the Bank of Russia.
Thus, to date, there are only two “public” rates: “short”, based on the key rate of the Central Bank, and “long” (primarily for foreign investors) based on the assessment of the risk premium of the Ministry of Finance against the risk of banks. It is unknown what the risk for foreigners is more significant — the banks or the Finance Ministry.
In any case, with inflation of 3-5% for government borrowing at 8% per annum and above are very expensive. Especially when the Treasury is quickly replenished with money from the growing oil. In this regard, the Ministry of Finance, and takes over again the decision on the recognition of certain auctions failed.
What to expect in the future
Probably, the market will continue to “lethargic”, clutched with one hand high key rate and the price of oil, bringing the budget of additional incomes. In this situation, any foreigners, scared of the possible sanctions against the national debt, nor the banks comfortable keeping funds in accounts with the Central Bank nor the Ministry of Finance itself, without effort crucial budget problems, not interested in the fact that the market has expanded.
The question remains whether public debt market, in conditions when the country can solve its budget problems at the expense of commodity exports (current income or accumulated funds)?
A hint can be found in the situation in Saudi Arabia, when after the fall of oil prices in 2014, the country not wanting to devalue the national currency and reduce the living standards of the population, was forced to Finance the sharply higher budget deficit due to the rapid increase in government debt.
In this context, the question remains, which tool is more suitable to stabilize conditions, adverse changes in the external environment — the devaluation or rise in public debt. First — it is easier and faster, but more painful, the second is more difficult and has long-lasting consequences, but much softer to the public.
Anyway, the maintenance of the OFZ market in fighting condition is vital, as experience has shown 2014-2017.