The second round of US sanctions imposed on Russia over the so-called Skripal case is entering into force. Experts interviewed by TASS believe that the new restrictions won’t harm Russia’s economy more than trade wars, including the one between the US and China, and oil market volatility.
The new sanctions prohibit US banks "from participating in the primary market for non-ruble denominated Russian sovereign debt and lending non-ruble denominated funds to the Russian government." The sanctions also include "US opposition to the extension of any loan or financial or technical assistance to Russia by international financial institutions, such as the World Bank or International Monetary Fund" and the "addition of export licensing restrictions on Department of Commerce-controlled goods and technology."
According to Renaissance Capital's experts, market participants took the sanctions into account after they had been announced, so when the restrictions finally become effective, they won’t have much impact on the market.
Alfa Capital’s expert Vladimir Bragin agrees that the market is unlikely to react to the new sanctions’ coming into effect. "Investors usually respond to such moves immediately, they don’t wait for sanctions to take effect," he explained.
Experts don’t expect the new sanctions to create difficulties for the Russian Finance Ministry as far as the Eurobond placement is concerned.
"Even if the Finance Ministry faces a lack of demand, it will be able to replace foreign borrowing with domestic loans," experts from Renaissance Capital said.
"The toughest sanctions over the Skripal case concern a ban on the US banks’ participation in the primary market for non-ruble denominated Russian sovereign debt. However, Russia’s national debt stands at just 12% of its GDP and the federal budget will remain in surplus as long as oil prices don’t drop to lower than $50 per barrel. In other words, these restrictions won’t seriously harm Russia’s economic interests," said Natalia Orlova, Chief Economist at Alfa-Bank.
Meanwhile, the new US sanctions show that political pressure on Russia is still there and more sanctions may be introduced in the future, which will threaten the country’s market, economists say.
"However, such threats don’t come as a surprise for investors, the Russian market has been on high alert for quite a while, so investors have built up immunity to such developments," Veles Capital analyst Yury Kravchenko said.
According to Renaissance Capital’s experts, the new sanctions will hardly have a significant impact on the Russian economy, while trade standoffs and declining oil prices may have more serious consequences.