Table of Contents 3

List of tables, figures, and boxes 4

List of abbreviations 6

About the Author 8

Abstract 9

1.Introduction 10

2.Institutional settings related to macroeconomic policymaking 13

2.1 Bank of Russia’s independence and monetary regime 13

2.2 Fiscal rules 14

2.3 National Wealth Fund and its institutional settings 16

3.A brief overview of the macroeconomic and fiscal situation in Russia in 2014–2021 17

4.Analysis of the macroeconomic and fiscal situation in wartime Russia 20

4.1 Overview 20

4.2 GDP dynamics 21

4.3 Balance of payments, official international reserves, and exchange rate 22

4.4 Inflation and monetary policy 27

4.5 Fiscal variables and the factors driving them 28

4.6 Structure of GG revenue and changes in tax policy 29

4.6.1 Structure of GG revenue 29

4.6.2 The role of oil and natural gas revenue 31

4.6.3 Changes in other taxes in the 2020s 36

4.7 Functional structure of GG total expenditure 37

4.8 Deficit and debt financing 40

4.9 Quasi-fiscal operations 43

4.9.1 QFOs conducted by the NWF 43

4.9.2 QFOs conducted by the banking sector 43

4.9.3 QFOs carried out by the corporate sector 49

4.10 Contingent and implicit fiscal liabilities 49

5.Short- to medium-term macroeconomic and fiscal prospects 51

6.Summary and conclusions 55

References 57