Will the Government Short-Term Bonds market return?

The Ministry of Finance of the Russian Federation considers the possibility of returning to the market of Government Short-Term Bonds. This was stated by Deputy Finance Minister Tatyana Nesterenko.

According to her words, the REPO (repurchase agreement) overnight instrument (issuing of available budget funds for one night) is creating. The attraction of additional liquidity mechanism is developing to reduce the risks of non fulfilment of current liabilities in 2015, which, obviously, will be difficult for the economy.

Government Short-Term Bonds were widely used in the market in 1990. They were one of key instruments of current government activity financing. In August 1998 the inability to meet obligations on Government Short-Term Bonds was the reason of Russian default. In 2005 it was decided to stop using Government Short-Term Bonds as such instrument was no longer necessary.

Time will show how reasonable is to come back to the market of short budget money in the conditions of macroeconomic uncertainty, strong volatility on currency market, the pressure of penalties and decreasing oil prices. However the government probably shows with this step that there might be problems with fulfilment of current liabilities next year.