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. Last Updated: 07/27/2016

Economist Slams Central Bank's Policies

Economist Andrei Illarionov, a frequent critic of the government's economic programs, took aim Tuesday at a fresh target: the Central Bank.


"Throughout the last four years, Gerashchenko and company have been doing their best not to give Russia a chance for financial stabilization," said Illarionov, the director of the Institute of Economic Analysis, referring to former Central Bank chairman Viktor Gerashchenko.


He also criticized the policies of the incumbent, Tatyana Paramonova, for contravening agreements Russia made with the International Monetary Fund this spring.


"The Central Bank has pursued a much softer policy [than the government]," Illarionov said, acknowledging that the government had significantly reduced the budget deficit with fiscal rigor.


"It can now be said that it was the policy of the Central Bank in the first half of 1995 that wrecked financial stabilization in 1995," Illarionov said.


The economist said the Central Bank's heavy intervention in the currency markets forced it to print 20 trillion rubles ($4.5 billion), driving up the money supply and inflation.


The Institute for Economic Analysis predicted that the monthly inflation rate would rise to 8 percent to 10 percent by the end of the year after hitting a forecasted low of 5 percent in August.


It also predicted the budget deficit in the third quarter to be 7.5 percent to 8 percent of gross domestic product, as opposed to an official forecast of 2.9 percent.


Illarionov also said the government had vastly understated the cost of the war in Chechnya. The eight-month-long conflict has cost Russia 33 trillion rubles, he said, against a government claim of 2.5 trillion rubles.