Russia needs to adopt both a tougher budget and tighter monetary policy to guard against the risk of overheating and to bear down on inflation, the International Monetary Fund said in a statement on Thursday.
The statement follows a meeting of the IMF’s Executive Board to discuss the results of annual consultations between the Fund and the Russian government.
IMF directors “recommended an ambitious fiscal consolidation path to reduce overheating pressures and vulnerabilities and ensure intergenerational equity,” it said.
They also “generally recommended a gradual further tightening of monetary policy to contain underlying pressures and anchor expectations.”
The IMF has warned repeatedly in recent months that it fears Russia’s economy is in danger of overheating – implying that demand is growing faster than potential output, leading to higher inflation.