Cbanker urges to abandon administrative price cap

MOSCOW, Apr 7 (PRIME) -- Russia’s central bank’s Chairwoman Elvira Nabiullina on Wednesday urged to quickly abandon the administrative price cap, as it distorts price indicators and discourages the development of production.

“In my opinion, the administrative price cap should be abandoned as soon as possible, because it distorts price indicators in the economy and discourages the development of production,” she said at a forum.

The damping mechanism for smoothing price fluctuations has shown itself to be quite effective on the oil products market, but it is important not to get carried away with it and to act carefully, Nabiullina said.

“The damper, in my opinion, should be transparent, understandable for manufacturers, so that they have incentives to develop production. In my view, there should be a budget-neutral damper, but this requires discussion,” she added.

Economic Development Minister Maxim Reshetnikov said the government should not widely use the policy of damping mechanisms to smooth out the influence of world prices on the domestic market, and it is necessary to use other instruments.

He also said the ministry considers it unreasonable to introduce a damping mechanism in Russia to smooth out fluctuations in prices for metal products, as the introduction of export duties will very quickly lead to deficits.

“In the metals sector, despite serious pressure from line ministries, we believe that the introduction of some kind of dampers is not only unreasonable, but by and large also impossible,” Reshetnikov said.

The introduction of export duties on metallurgical products may seriously disrupt incentives for manufacturers to produce products, he said. “We will just very quickly face deficits right at the second step,” he said.

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