For over 20 years, Andrei Kostin, 68, has headed VTB, Russia's second-largest bank, more than 61% of which is state-controlled and considered one of the Kremlin's financial arms. Appointed two years after Vladimir Putin came to power, the graduate in economic policy and former career diplomat is considered close to the ex-spy-turned-president. The West has imposed sanctions on VTB and its boss, who has been banned from entering the West. Le Monde met him in Ras Al Khaimah, United Arab Emirates, on the sidelines of the Verona Eurasian Economic Forum on December 5 and 6, the day after his meeting with Vladimir Putin.
Speaking at a conference organized by your bank in Moscow on December 4, Vladimir Putin demanded "action" from the government and the central bank to combat inflation, which at almost 9% is double the official target. What kind of "action" should this be?
Despite enormous external pressures, the Russian economy and banking sector are in good shape. The overall macroeconomic situation remains stable. The government and the central bank are sticking to flexible and prudent monetary and economic policies. I believe that the inflationary risks we face today are manageable.
The Central Bank of Russia has already raised its interest rate, which, at 21%, is at a record high. By the end of the year, it could rise again. As a result, VTB, our bank, has raised borrowing rates to 26% or even 27%, but we are remunerating deposit accounts at 23% or 24%. From 2025, the central bank will impose new capital requirements to authorize loans. For corporate borrowing, it is also adding new measures, which will reduce borrowing opportunities. As a result, VTB's lending to businesses is set to rise from 20% in 2024 to 10% in 2025. For consumer loans, we expect even minimal growth. And real estate loans are expected to fall by 20-30%.
These measures enable the central bank to fight inflation. The government is promising a budget deficit limited to just 1% by 2025. It will stop subsidizing home loans, and other measures, to keep the budget in balance. For the authorities, it's a choice between bad solutions and worse ones. The government has warned that GDP growth should fall from 4% in 2024 to 2% in 2025. But that's the price we have to pay to bring inflation down.
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