OREANDA-NEWS. September 11, 2009. According to CBR, in August Russia’s monetary base was up 1.5% to RUB4.922 tr. In annual terms, growth is still negative (-8.2% YoY), reported the press-centre of OTKRITIE FC.

View: Last month saw an increase in budget expenditures and a growth in the deficit. There was good reason to expect that the monetary base might grow faster, though this did not occur. At present, we still await further data, but from our point of view the main reason for slow money growth was the redeeming of loans to CBR by commercial banks.

Capital outflow also took place, but their contribution was not as big as the amount of loans that were redeemed. Indeed, CBR net sales in August were not at all impressive-- US1.2bn and EUR0.2bn. We regard the news as slightly positive because, despite the monetary squeeze and frozen credit, the banking system is improving its balance sheet by replacing expensive funds (received from the state) with cheaper resources that come from budget expenditures.