Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The IMF has indefinitely postponed its first official visit to Russia since President Vladimir Putin ordered the full-scale invasion of Ukraine following criticism from several of Kyiv’s European allies, according to the IMF and Russian state media.
The IMF’s leadership scrapped plans to begin a routine review of the Russian economy this week ahead of a trip to Moscow later this month because the mission was “technically not ready”, Alexsei Mozhin, the IMF’s executive director for Russia, told Tass news wire on Wednesday.
Mozhin said the last-minute decision was taken on Monday, the day preliminary talks were supposed to start. He suggested the U-turn had been prompted by objections from European countries to the IMF’s renewal of its ties with Russia.
In a letter seen by the Financial Times and signed by Poland, Denmark, Finland, Sweden, Lithuania, Latvia, Estonia, and non-EU members Iceland and Norway, ministers spoke about the “reputational risk” to the IMF and implied that such a visit would “diminish donors’ efforts and actions in supporting Ukraine through IMF initiatives”.
The visit for what are known as Article IV consultations “would be a sign for the international community that the IMF is ready to go back to business as usual, taking a step towards normalising relations with the aggressor”.
The signatories also spoke up during a meeting of EU finance ministers in Budapest on Saturday, which turned into a “heated discussion” with IMF managing director Kristalina Georgieva, according to one participant. At the time, Georgieva defended her decision to let the staff mission go ahead, according to the person.
The IMF said: “Article IV consultations with Russia have been postponed while we gather all the necessary data and analysis for a rigorous consultation.”
The fund had previously justified the visit under what it described as its obligations to Russia as a member state after its economic situation became more “settled”.
Mozhin announced the IMF mission earlier this month. It would have been the first by a major international finance body to Moscow since the full-scale invasion began in 2022 and the fund’s first visit to Russia since 2019.
Ksenia Yudaeva, a former deputy governor of Russia’s central bank, has been nominated by Moscow to replace Mozhin as of November 1 though the IMF board has yet to confirm her appointment. Mozhin has served at the IMF since Russia joined it in 1992.
It is unclear how Yudaeva, who is under US sanctions, would perform the role.
Despite an unprecedented effort by western countries to isolate Moscow from the global economy and limit the Kremlin’s ability to fund the war in Ukraine, Russia’s GDP is expected to grow up to 4 per cent this year, according to the central bank.
The bulk of the growth has been fuelled by record spending on Russia’s military, which has stimulated strong growth in real wages and an ensuing consumer spending boom.
Russia, however, has classified large swaths of government data on its economy and foreign trade under efforts to avoid western sanctions, making it difficult for observers such as the IMF to obtain a full picture of the country’s economic health.
The central bank warned last month that Russia’s “overheating” economy would slow sharply next year amid labour shortages and restrictions under the sanctions that would limit capacity to grow domestic production.
Read the full article here
