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.
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