IMF advises broader powers for Russian central bank

The International Monetary Fund has recommended the Russian authorities broaden the central bank's supervisory powers as banks hold considerable volumes of non-performing loans, IMF European Department Director Antonio Borges said on Friday. The central bank has recently revealed a significant hole in the assets of Bank of Moscow, Russia's fifth-largest bank and the capital's investment vehicle under previous mayor Yury Luzhkov. Borges said the discovery was detrimental to the trust on which the banking sector should be firmly based. The IMF believes that the practice of granting loans to related companies on preferential terms, widely used in Russian banks, represents an inefficient use of resources which may lead to loan quality worsening. The fund has also recommended the government work out special terms to solve bankruptcy cases and remove obstacles to solving them. The IMF still expects Russia's gross domestic product growth to reach 4.3 percent this year and 4.1 percent in 2012, but it does not rule out the forecast may fall taking into account international oil prices and Russia's dependence on them.