Russian Federation

Russian Federation

Population 143.4 million
GDP 9,243 US$
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major macro economic indicators

  2014 2015  2016 (e) 2017 (f)
GDP growth (%) 0.7 -2.8 -0.2 1.0
Inflation (yearly average) (%) 7.8 15.5 7.0 4.2
Budget balance (% GDP) -1.1 -3.4 -3.7 -2.6
Current account balance (% GDP) 2.8 5.2 1.7 2.6
Public debt (% GDP) 15.6 15.9 17.0 17.1


(e) Estimate (f) Forecast


  • Abundant natural resources (oil, gas and metals)
  • Skilled labour force
  • Low public debt and comfortable foreign exchange reserves
  • Assertion of regional and energy power 


  • Increased rentier nature of the economy
  • Weak private banking sector
  • Weak infrastructure aggravated by very low level of investment
  • Declining demographics
  • Persistent deficiencies in the business climate 


Modest rebound after two years of recession

Russian growth is expected to be positive in 2017, although weak. Activity in the hydrocarbon sector is expected to progress only slightly: at the end of 2016, production reached a record level (11.2 million bl/d), whereas the lack of investments and the maturity of numerous oil fields limit the prospects for increasing production capacities. Moreover, Russia has committed since the end of November 2016 vis-à-vis the OPEC countries to lowering its production by 300,000 bl/d until March 2018. The manufacturing sector (food processing, chemical/pharmaceutical, automobile) may benefit from a slight recovery in domestic demand. Private investment, down since 2013, showed signs of recovery during the first quarter 2017 (+2.3%). Private consumption is expected to be sustained by a slow increase in household income, linked in particular to a new and somewhat less restrictive budget policy. Real income could also continue to benefit from a slowdown in inflation.

Price increases let up sharply in early 2017 (4.1% in April), nearing the central bank’s target of 4% and allowing a softening of monetary policy (rate reduced from 11% to 9% between May 2016 and June 2017). The relative stability of the rouble should make it possible to keep inflation at a moderate level. 

In the absence of real progress in the conflict in the east of Ukraine, the economic sanctions targeting trade and access of Russia to financing imposed by the EU have been maintained until 31 July 2017. The possibility of an easing or a lifting of the sanctions applied by the United States, entertained for a short time after the arrival of Donald Trump at the White House, seems to have receded. The country’s access to international financing will thus remain limited, restricting the rebound of growth.


Improvement in the fiscal and current account balance 

Fiscal income is projected to rise in 2017 thanks to changes in taxation of the hydrocarbon sector and the profits of public-sector companies. The moderate rise in oil prices will thus boost State revenues. Further privatisations (VTB Bank and the shipping firm, Sovcomflot, in particular), after those of Alrosa, Bashneft and Rosneft in 2016, will also contribute to the improvement of the public finances. The 2017 draft budget includes an increase in social spending, offset by cuts to other items. The aim is to gradually bring down the deficit, while sustaining demand in the run up to the presidential elections in 2018 without fuelling inflation.

The State, whose debt remains low, has comfortable foreign exchange reserves (around 11 months of imports in late April 2017), plus sovereign fund assets totalling near USD 90 billion (about 6% of GDP) at end April 2017.

The current account surplus is expected to increase due to a rise in hydrocarbon exports (about 2/3 of total exports), which however is likely to be modest due to the absence of high increase in prices and to the commitment to reduce production. The upturn in domestic demand, even though it is moderate, could however be reflected in higher imports, limiting the improvement in the current account balance.

The rate of the rouble, sustained by a price for petroleum higher than in 2016 and by fairly attractive yields (carry trade), is not expected to rise sharply in 2017. The authorities have launched a program for purchasing currencies in order to reconstitute the reserves and limit the rise of the rouble which, in national currency, reduces budget receipts from the petroleum sector. An increase in the dollar, a new decrease in the price of petroleum or capital outflows (an increase of nearly $10 billion in maturities of foreign debt in 2017) would weigh on the rouble.

The situation in the banking sector appears to be stabilising as a result of the measures taken in the sector by the central bank which led to the closing of 130 establishments between January 2016 and the end of April 2017.



Political situation expected to remain stable and business climate still poor 

The crisis in Ukraine played a unifying role among the Russian population and has reinforced Vladimir Putin's popularity. The September 2016 parliamentary elections confirmed the dominance of President Putin's United Russia Party (54% of the votes cast), but on a low turnout (48% compared with 60% in 2011). Dissatisfaction exists, as shown by the demonstrations in March and June 2017, but State control of the media and the internet considerably limits the ability of opposition movements to organise and express themselves. A. Navalny, an anti-corruption militant who appeared to be a figure able to incarnate the various opposition movements, is now involved in a number of legal proceedings and will not be able to stand for the presidential elections in March 2018.

Governance shortcomings and the lack of corporate transparency strongly weaken the business climate. Russia has been downgraded on most of the World Bank's indicators, especially regarding regulatory quality and has made no progress on the fight against corruption. 


Last update: June 2017


Bank transfers in Russia are among the most popular instruments used for non-cash payments, for both international and domestic transactions. This is because they are fast, secure, and supported by a developed banking network.


Despite this, cash is still one of the most widespread payment instruments used by both businesses and individuals. 

Debt collection

Amicable phase

Amicable settlement between debtors and creditors allows for funds to be repaid without pursuing extensive legal action. The phase begins with the creditor contacting the debtor, either via written correspondence or phone calls. If an agreement is reached, a payment plan can be offered to the debtor.


Charging interest is legally allowed but hard to enforce unless an agreement to pay said interest currently exists between the debtor and the creditor. Any such agreement must be additional to any standing agreement between the parties.


Legal proceedings

The Russian judicial system is comprised of three branches:

  • the regular court system
  • the arbitration court system, headed by the Supreme Court
  • the Constitutional Court: a single body with no courts under it.
    • In Russian constitutional law this function is known as "constitutional control" or "constitutional supervision", and deals with a certain number of disputes where it has original jurisdiction

The regular courts have a four-tier hierarchy and are responsible for civil and criminal cases:

  • The Supreme Court of Russia
  • Regional Courts
  • District Courts
  • Magistrate Courts

Arbitration courts review cases dealing with a wide matter of contractual issues, such as rights of ownership, contract changes, performance of obligations, loans, bank accounts and bankruptcy.


The highest court of appeal is the Supreme Court of the Russian Federation.


Fast-track proceedings

Russian law provides for simplified proceedings for certain types of cases, in which the creditor seeks to recover no more than RUB 300,000 from a legal entity or RUB 100,000 from an individual entrepreneur.


Under Russian law, judges are to consider cases through simplified proceedings within a maximum of two months form the day when theArbitrazhcourt receives the statement of claim or application. Once the deadline for submissions of evidence has passed, cases are reviewed on their merits by judges, without the parties being called to appear.


Ordinary proceedings

Proceedings are initiated when a creditor files a statement of claim with the competentArbitrazhcourt. The court must decide within five working days whether to accept the statement, and subsequently schedule a preliminary hearing.


Debtors are usually notified of claims when they are served with a copy of the statement of claim, which includes the data of the initial hearing. There is no specific time frame during which defendants must submit their defense, but it must generally be done before the hearing on the merits). The court can set a deadline for submitting a statement of defense – if this is not submitted, the court will consider the case on the basis of the available materials. The preliminary preparation period ensures that the case can be resolved on its own merits during one court hearing. Cases must generally be resolved on their merits within three months after the respective statement of claim is received by the court. More complex commercial disputes can take considerably longer. The courts will normally award remedies in the form of compensatory damages or injunctions but punitive damages are not available.


Enforcement of a legal decision

A judgment is enforceable for three years provided that is has become final. If the debtor fails to satisfy the judgment, the creditor can request compulsory enforcement of the judgment from the court’s bailiff services.


Foreign judgments must be recognized as a domestic decision by theArbitrazhCourt through the Russian exequatur procedure. Although Russia has signed a small number of reciprocal recognition and enforcement agreements with foreign countries, domestic courts are reluctant to recognize foreign jurisdiction clauses. 


Insolvency proceedings


Commercial Courts initiate the supervision process to evaluate the debtor’s financial situation and to secure the debtor’s property. After examining a filed insolvency claim, the court initiates the supervision process. The debtor can autonomously request a court to initiate supervision if settling some creditors’ claims would make it impossible for the debtor to fulfill other obligations, if execution on the debtor’s property means the debtor’s business has to cease, or if the debtor’s business is insolvent. A receiver is appointed, known as a temporary manager, who must approve certain transactions during the supervision, such buying or selling more than five percent of the accounting value of the debtor’s property.


Financial rehabilitation

The aim is to carry out any necessary measures to restore debtors’ solvency and settle their debts. The court and the creditors control the process.. The application must include a rehabilitation plan that ensures the debtor’s obligations will be met. The court appoints a receiver to be the administrative manager, who supervises and controls the debtor’s affairs during the period of the financial rehabilitation. The administrative manager examines the debt repayment schedule and monitors any financial restructuring plans.


At least one month before the period of financial rehabilitation expires, the debtor must provide the administrative manager with a report on the results of the financial rehabilitation. Once report examined, the manager must prepare an opinion on the extent to which debts have been paid and the financial restructuring plan has been achieved. The opinion is submitted to the court, which examines the results and either ends the proceedings, orders external administrator to manage the company, or declares the debtor bankrupt.


External administration

The objective is to restore the debtor’s solvency by applying special measures under an external administration plan, and to replace the debtor’s chief executive officer (CEO) with an independent external manager. Once the procedure begins, the court appoints a receiver known as the external manager, who must draft an external administration plan setting out the measures necessary to restore the debtor’s solvency within the period of the external administration procedure. At the end of the period, the manager prepares and submits a report to the creditor’s meeting, together with a proposal of one of the following four options: 

  • to either end judicial proceedings, if all creditors have been settled)
  • extend the period
  • end external administrator, as the debtor is now solvent
  • enter administration and file for bankruptcy.
Amicable arrangement

Debtors and creditors may make an amicable arrangement to adjust debtors’ liabilities on negotiated terms during any rescue procedures. Generally, an amicable arrangement ends the powers of court-appointed receivers. If a debtor fails to comply with terms of an amicable arrangement, creditors are entitled to ask for a bailiff to execute the agreement.



The purpose of insolvency is to sell the debtor’s property and use the proceeds to pay creditors’ claim in proportionate amounts. The court may initiate the process during supervision, financial rehabilitation, or external administration. It appoints a receiver (insolvency manager) to replace the debtor’s CEO. The court and the creditors control the activity of the insolvency manager, who must provide progress reports. At the end of the proceedings, the court reviews the list of satisfied and unsatisfied claims. If they are fully satisfied, the court rules the proceedings complete and the debtor is liquidated. If they are not satisfied, proceedings are terminated, the debtor company is dissolved, and unsatisfied creditor’s claims are to be written off. 

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