Russia

Russia's central bank hiked interest rates to their highest since the Kremlin sent troops into Ukraine more than 2 1/2 years ago, a step aimed at combatting the inflation fuelled by massive government outlays for the military — and by robust spending from Russian consumers in shops, the Associated Press reported. The bank raised its key rate to 19%, just below the level from late February 2022. Then the policy rate reached an unprecedented 20% in a desperate bid by the bank to shore up the ruble and ward off a financial collapse amid sanctions imposed by Western governments.

Several European Union nations intend to challenge International Monetary Fund chief Kristalina Georgieva about the Washington-based lender’s plan to engage with Russia on economic issues for the first time since the invasion of Ukraine, Bloomberg News reported. At a meeting of EU envoys Wednesday, France, Belgium and Poland, as well as several Baltic and Nordic nations, said they were surprised by the IMF’s decision earlier this month to restart annual economic reviews with Moscow.

Some Russian companies are facing growing delays and rising costs on payments with trading partners in China, leaving transactions worth tens of billions of yuan in limbo, Russian sources with direct knowledge of the issue told Reuters. Russian companies and officials for a few months have pointed to delays in transactions after Chinese banks tightened compliance following Western threats of secondary sanctions for dealing with Russia. The sources said the problem has intensified this month.

Russia’s Central Bank on Friday raised its key lending rate to its highest level in more than two years to stem soaring inflation in an overheated economy hit by Western sanctions in response to Moscow's military action in Ukraine, the Associated Press reported. The bank raised the rate by 200 basis points to 18.00%, noting that inflation has accelerated and is developing “significantly above” its forecast. “Growth in domestic demand is still outstripping the capabilities to expand the supply of goods and services,” the bank said in a statement.

Britain added 11 new shipping sanctions under its Russia sanctions regime related to the war in Ukraine, an official notice showed on Thursday, SwissInfo.ch reported. The government said the sanctions on ships including Zaliv Amurskiy and SCF Pechora relate to the carrying of oil or oil products from Russia to a third country. The ships are believed to have the flags of Panama, Gabon and the Cook Islands, the government notice said.

Russian President Vladimir Putin on Friday endorsed a bill that raises income taxes for the rich, part of efforts to help fill government coffers during the fighting in Ukraine, the Associated Press reported. Putin signed the bill into law two days after it was approved by both houses of parliament. The legislation, which envisages a progressive tax on personal income, is a major change from the flat-rate tax that was widely credited with improving revenue collections after it was introduced in 2001. The new law imposes a 13% tax for incomes of up to 2.4 million rubles ($27,500) a year.

Russia’s central bank Friday left its key interest rate unchanged for the fourth straight meeting, but signaled it may raise borrowing costs to tame a pickup in inflation driven by the diversion of manpower and other resources to sustain the invasion of Ukraine, the Wall Street Journal reported. In 2023, with inflation surging, the central bank raised its key interest rate five times before pausing as inflation appeared to cool. But prices have begun to rise more rapidly over recent months as the war entered its third year.

The economies of central Europe are set for stronger growth this year and next as inflation cools, but Russia’s invasion of Ukraine will continue to cast a shadow over their prospects in the form of higher borrowing costs, the European Bank for Reconstruction and Development said Wednesday, the Wall Street Journal reported. The London-based development bank also noted a surge in Chinese investment in parts of Europe and North Africa last year as businesses sought to avoid barriers to their exports.

Sri Lanka will hand over management of its $209 million Chinese-built airport to two Indian and Russian companies, a cabinet statement said on Friday, as the island nation attempts to reduce losses from its state enterprises. Mattala Rajapaksa International Airport (MRIA), funded by China EXIM Bank, has stoked controversy since its opening in 2013 due to a low number of flights, environmentally sensitive location and persistent financial losses. The airport's management will be handed over to Shaurya Aeronautics (Pvt) Ltd.