Study: Sanctions on Russia expected to bite in 2023 but more can be done

Sanctions on Russia may reach a turning point in 2023, but there are opportunities to toughen them, according to an international working group studying their impact.

The working group is led by Presidential Office head Andriy Yermak and includes the Freeman Spogli Institute for International Studies, U.S. Ambassador Michael McFaul, and experts from the Kyiv School of Economics.

The study found that the sanctions' impact had a significant start-up lag but is now having a substantial effect on the Russian economy, the Office of the President reported in a summary of the findings.

The balance payment surplus was down 60% from the second to the fourth quarter of 2022 and the trend appears to have continued into 2023, the researchers found.

The ruble lost 20% of its value since November, which sets the stage for higher consumer prices at a time when fewer Russians can afford them.

The study also concluded that the Kremlin is burning through its National Welfare Fund and may be out by the end of the year.

Receivables from oil and gas are expected to fall by 50% in 2023.

"At the same time, the sanctions regime is still far from exhausting its potential and needs constant updating and improvement. Further steps towards new sanctions restrictions must be applied,” the authors concluded.

Yermak said that the international group is working on reducing price caps for Russian hydrocarbons and eliminating sanction exemptions for certain Russian state-owned companies