Russian Economic Reform

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Finance Ministry’s “banana republic” approach to PR

Published on July 23 2011
Posted by: jeff

Expert Group 2, which is concerned with “Budgetary and monetary policy and macro-economic parameters for developing the Russian economy”, has been one of the least active of the 21 Groups. Budgetary and monetary policy can be quite technical issues and it is essential to get these right, but Group 2 might also consider helping the Ministry of Finance understand the PR side of macro-economic policy – after all, isn’t the idea of managing “inflationary expectations” really based on a PR stunt?

According the last Friday’s edition of “Vedomosti”, last Thursday – on 21 July – the Finance Minister, Alexei Kudrin presented the Federal budget results for the first half of 2011 to a meeting of the presidium (or cabinet) chaired by Vladimir Putin. So that Putin would be the “first to know the fresh figures”, according to the article, “the Ministry delayed official publication of the data on its own site – ordinarily it is placed there no later than the 15 of July”.

And sure enough, when I checked back I found that the results for the first half of 2010 were released on 12 July 2010.

In my view, a publication delay of this sort indicates a lack of professionalism by the Ministry. Keeping outsiders informed – including financial market participants – is an important part of good macro-economic policy. (And, the “insider” Putin would have, or should have, been informed earlier if the data was ready.)

Some years ago when I was a professional macro-economic and financial market forecaster, the late release of such data could breed suspicions that there was something to hide. And — in times of uncertainty — such suspicions can combine with other events to have significant adverse effects on financial markets. In this particular Russian case there was nothing to hide, but such games with budget information make Russia look like a “banana republic”.