Russian Federation

Russian Federation

Population 143.4 million
GDP 9,946 US$
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major macro economic indicators

Main economic indicators 2015 2016 2017(f) 2018(f)
GDP growth (%) -2.8 -0.2 1.5 1.8
Inflation (yearly average, %) 15.5 7.1 3.7 3.5
Budget balance (% GDP) -1.5 -3.3 -1.6 -0.0
Current account balance (% GDP) 5.0 1.9 2.2 3.0
Public debt (% GDP) 15.9 16.3 15.4 14.0

(f): forecast


  • Abundant natural resources (oil, gas and metals)
  • Floating exchange rate of the ruble since November 2014
  • Political stability
  • Trained workforce
  • Low public debt, comfortable foreign exchange reserves and current account surplus
  • Ongoing purge of the banking sector with reduction in the number of institutions
  • Maintained regional and energy power


  • Dependence on the price of hydrocarbons
  • Declining demography, except in major cities
  • Absence of commercial agreements beyond its immediate neighbours
  • Dependence on foreign capital goods and technology
  • Weak infrastructure aggravated by lack of investment
  • Regional disparities despite redistribution
  • American and European sanctions
  • Mediocre business climate


Confirmation of modest recovery

Modest recovery has been taking place since the end of 2016 in connection with the positive influence of the rise in oil prices on confidence and domestic demand. Household consumption will again be the main contributor to growth in 2018. Households will maintain confidence, benefiting from higher incomes, the revival of credit and moderation of inflation based on food prices and the stabilisation of the ruble. For the same reasons, the investment should remain well oriented. The rise of the ruble, which accompanied that of oil prices, makes the importing of capital goods cheaper. However, shortcomings in the business environment and the weight of sanctions on external financing will hinder growth in some sectors. If inflation remains below the 4% target, the central bank could continue to lower its key rate (8.5% in November 2017). Nevertheless, higher wage growth than productivity and high inflationary expectations will encourage caution. In addition, while bank profitability, which fell to zero in 2015, is on the rise, private banks (slightly less than half of the assets, but the largest number of institutions) are lagging behind. Moreover, the increase in oil revenues should allow a slight relaxing of the fiscal policy at the social programme level, even if public consumption is still expected to stagnate. Finally, the contribution of trade to growth may no longer be negative if the catch-up effect in imports of consumer goods and equipment recedes. The manufacturing sector (agri-food, chemistry/pharmaceuticals, automotive) should benefit from the proper orientation of domestic demand.

In the absence of progress in resolving the Ukrainian conflict, Western sanctions targeting leading figures and the energy, defence and finance sectors through restrictions on travel, trade, investment and financing should continue. This will maintain the lack of investment, hampering the development of offshore fields and innovation, likely to offset the maturation of many fields and increase the growth potential estimated at 1.5%.

Public and current accounts more positive

The overall budget is likely to be balanced in 2018, thanks to the increase in oil revenues. The 2017-2019 triennial budget provides for a 1% annual decrease in the non-oil deficit (-7% of GDP in 2017). Dividends paid by public companies will reach half of their profits, excise duties on tobacco and alcohol will increase, as will taxation on extractive businesses. Expenditure control will be more difficult given the indexing of pensions and wages to inflation, as well as the desire to maintain transfer payments and subsidies. In 2019, a new fiscal rule will come into effect. It stipulates that primary expenditures (in other words excluding interest) cannot exceed the sum of oil revenues calculated on the basis of USD 40 per barrel and non-oil revenues. Surplus oil revenues will go into the Reserve Fund, which has been heavily depleted between 2015 and 2017, keeping public debt at a low level. Combined with those of the National Provident Fund, assets account for just over 5% of the GDP.

The current account surplus is likely to increase in 2018. It is based on the considerable trade surplus linked to hydrocarbon exports (60% of total exports) which largely offsets the deficit in services and revenues (oil and gas engineering expenses, Russian stays abroad, foreign corporate dividends, transfers of foreign workers). The increase in hydrocarbon sales does not translate into an increase in the surplus, as the domestic economic upturn is reflected in an increase in imports. Despite the efforts made since the application of sanctions, the substitution of domestic products for imports has had little success, except in the agri-food sector. The financial account is negative, as the Russian private sector makes financial and real estate investments abroad, while new foreign investment in Russia is low. However, funds are coming back to Russia in the form of foreign loans, often by those who have put money in there. For this reason, private external debt (35% of the GDP) must be put in perspective, especially since reserves represent more than 16 months of imports.


Political stability but deficient business environment

The crisis in Ukraine, sanctions and aggressive international activism have strengthened the popularity of Vladimir Putin, who can, in addition, claim economic recovery.  Vladimir Putin, who has been in power for 17 years, won the March 2018 presidential election in the face of weakened opposition, boosted by controlled media and the Internet, and whose main figure, Alexei Navalny, is under fire for various legal proceedings and cannot run. The issue of the election lied more in participation, which reached a quite elevated 67%. It is still uncertain whether much needed reforms will take place to improve a poor business environment marked by state interventionism, the random execution of contracts, favouritism, relative respect for property rights and administrative delays.


Last update: July 2018


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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