Russia facing big economic challenges, Vladimir Putin accepts
Russia's budget is under strain amid Ukraine war as the central bank was forced to increase interest rates last week.
Russian president Vladimir Putin that inflationary risks in the country's economy were rising, telling the government and central bank to keep the situation under control. Surging prices will erode living standards which remains a major concern for Vladimir Putin as he prepares to launch an expected bid to be re-elected next March for six more years as the premier.
Russia's budget is under strain amid Ukraine war as the central bank was forced to increase interest rates last week to halt a slide in the rouble.
"The scale and complexity of the tasks we are solving, and continue to solve, are of a really exceptional nature," Vladimir Putin said to government officials, adding that the overall situation was stable but required vigilant monitoring and timely decisions.
Russia witnessed double-digit inflation in 2022 but the pace of price rises dropped in the spring. Inflation is now above the central bank's 4% target once more and rising steadily as well. Russia's widening budget deficit and stark labour shortage have contributed to the rising inflationary pressure in 2023.
Vladimir Putin said volatility on financial markets hampered companies' investment decisions directing, "The government and central bank need to actively use the instruments available to them. Work is needed, among other things, on limiting unproductive, speculative demand, controlling the outflow of capital, monitoring the behaviour of the main participants of the financial market."
It was important for Russia to maintain a high level of industrial output, the Russian leader added saying that the budget was forecast to be in surplus for July to September.
"For the year as a whole, the excess of expenditure over income will be at the planned level - around 2% of GDP," he said.