‘Inflation and tariffs of natural monopolies: the national catch-up game’. General Director of FBK Economic and Law School is online of Finam

On 3 June Sergey Pyatenko, General Director of the FBK Economic and Law School (ELS), appeared at the online conference of ‘Inflation and tariffs of natural monopolies: the national catch-up game’ organized by the finam.ru.  The discussion was focused on the inflation, which, according to the Russian Ministry of Economic Development (MOED), has made about 3% since the beginning of 2013. However, it is planned to index gas tariffs by 15% since 1 June.  And, traditionally, the growth of tariffs of natural monopolies has an impact on the dynamics of consumer prices. Is the Government ready to revise the natural monopolies’ tariff policy? Is it feasible to curb the inflation at 5-6% formally projected by the MOED? 

In his response to the question whether it might be advisable to ease the monetary policy under the circumstances, S. Pyatenko reminded that the easing was specifically carried out to promote the economic growth: ‘Measures to accelerate the economic growth pose the threat of accelerating the inflation, says the expert. – And, vice versa, fight against the inflation may slow down the economic growth. And that, certainly, is a rough layout. But when they do want to increase the growth, they ease the monetary policy’. And the economist urged not to overestimate the effectiveness of measures taken in this area: ‘Monetary policy is only one of the many factors affecting the economic growth. The decline in interest rates in the market (reduction of the ‘credit price’) will surely be conductive to the economic growth. But if nothing else is done, that alone might be obviously not enough’. 

The ELS Director believes that in the nearest future Russia, owing to its level of development, is doomed to quite a substantial inflation: ‘There are practically no countries in the world without inflation; and it plays its positive role. And it’s quite another thing that at one level of the economic development a normal inflation is 3-5%, at another 6-10%, and at the third one - 10-20%’. For 2013 the economist estimates the inflation in Russia to be 7-8%.

One of the participants in the conference suggested that the monopolies should be split up for the new players to compete among themselves and reduce the prices. S. Pyatenko did not support the idea: ‘To increase the level of economic competition in Russia is a truly important objective. But, at the same time, we should admit that only super large companies can be serious players globally. And having broken such structures as Gazprom, Russia is very much at risk of being broken itself’.

Ilya Dolmatov, Director of the Institute of Pricing and Regulation of Natural Monopolies of HSE, Anton Soroko, the analyst of Finam, and others took part in the conference.