Russia prepares RUB1.375 trillion anti-crisis plan

By bne IntelliNews January 22, 2015

bne IntelliNews -

 

Russia's President Vladimir Putin has approved the provisional version of an anti-crisis plan drawn up by the government. According to media reports, the plan involves recapitalisation of banks, provision of state guarantees, support measures for state development bank VEB and diverse sectors, changes to state procurement laws and procurement to facilitate import substitution, support for small business, and tax rebates.

First deputy prime minister Igor Shuvalov estimated the cost of the plan at RUB1.375 trillion, or around $20bn, and said some measures would have to be rejected since they would put too much strain on the budget. “We can't run a deficit of 15% of GDP, the parameters have to be reasonable,” he said. “They will of course be more than we had planned, but they will be less than in 2009,” he said, as quoted by business daily Vedomosti. In 2009, the budget deficit ran to 5.9% of GDP, financed from Russia's sovereign wealth funds.

The largest expenditure items in the current anti-crisis plan include RUB250bn recapitalisation of banks, to be taken from the National Welfare Fund, RUB50bn in funds for support of agriculture, RUB20bn in state guarantees for industry, RUB16bn in funding for purchase of imported medicines, the cost of which has soared due to the ruble's devaluation.

Putin requested at the meeting that the government specify the source of funding for a number of proposed measures, according to Kommersant.

Deputy prime minister Arkady Dvorkovich said that budget expenditure in 2015 could be cut by 10-15% over all, “probably by 10%", he said, as quoted by Interfax. A significant amound of funding for the anti-crisis plan will come from these planned budget cuts, say analysts. Funds will also be drawn down from the National Welfare Fund, a sovereign wealth fund.

Some measures previously considered in the course of the week have already been rejected, according to media reports, such as the creation of a 'bad bank' to deal with non-performing loans.

The finance ministry criticised the overall plan as developed by the economy ministry, saying that the plan should aim at achieving structural change in the economy, rather than catering to problems in individual branches, according to documents seen by Vedomosti. Previous reports say that the proposed plan could cost as much as RUB2 trillion.

Related Articles

Drum rolls in the great disappearing act of Russia's banks

Jason Corcoran in Moscow - Russian banks are disappearing at the fastest rate ever as the country's deepening recession makes it easier for the central bank to expose money laundering, dodgy lending ... more

Kremlin: No evidence in Olympic doping allegations against Russia

bne IntelliNews - The Kremlin supported by national sports authorities has brushed aside "groundless" allegations of a mass doping scam involving Russian athletes after the World Anti-Doping Agency ... more

PROFILE: Day of reckoning comes for eccentric owner of Russian bank Uralsib

Jason Corcoran in Moscow - Revelations and mysticism may have been the stock-in-trade of Nikolai Tsvetkov’s management style, but ultimately they didn’t help him to hold on to his ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss