Russia: is fiscal policy really impotent?

The debate over the role of policy stimulus in reviving Russia’s flagging economy has been given extra impetus over the past week by the release of the IMF’s latest Article IV report, which argues that looser policy would do little to support growth. But we’re not so sure. Fiscal measures could, in theory, provide a substantial boost to Russia’s struggling economy if well-targeted. Instead, the real problem lies in both poor implementation and a tendency to prioritise current spending over much-needed investment.