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  • Russia’s January 2015 anti-crisis plan
    On 27 January 2015, Kremlin adopted an anti-crisis plan with the goal to ensure sustainable economic development and social stability in an unfavourable global economic and political environment. It announced that in 2015–2016, steps will be taken to advance structural changes in the Russian economy, provide support to systemic entities and the labour market, lower inflation, and help vulnerable households adjust to price increases. To achieve the objectives of positive growth and sustainable medium-term macroeconomic development the following measures are planned:

    - Provide support for import substitution and non-mineral exports.

    - Support small and medium enterprises by lowering financing and administrative costs.

    - Create opportunities for raising financial resources at reasonable cost in key economic sectors.

    - Compensate vulnerable households (e.g., pensioners,) for the costs of inflation.

    - Cushion the impact on the labour market (e.g. provide training and increase public works).

    - Optimize budget expenditures.

    - Enhance banking sector stability and create a mechanism for reorganizing systemic companies.


    The government aims to achieve a balanced budget in the medium term and intends to cut budget expenditures by 5% in real terms in the next three years. In 2015, the plan is to cut 10% of spending across all categories except military, agriculture, and external debt-servicing. The Ministry of Finance currently plans to use the Reserve Fund to optimise federal budget spending. It is expected that about RUB1.4 trillion of the anti-crisis plan will be financed this year, of which up to RUB972 billion will be financed from the federal budget and RUB550 billion with the National Welfare Fund (known domestically as "NWF”).


    It is estimated that the plan will cost RUB2.4 trillion, of which 67% is earmarked for bank recapitalisation, which will operate through three channels:

        (1) Treasury bonds worth RUB1 trillion had already been transferred to the Deposit Insurance Agency in December 2014. In February 2015 the government approved a list of 27 banks eligible for recapitalization. Banks to be recapitalized are expected to increase mortgage loans, loans to small and medium enterprises, and loans to key economy sectors by 1% per month and increase their own capital by at least half of the amount received from the Deposit Insurance Agency.

    (2) The NWF will finance a second channel, investing RUB250 billion in subordinated deposits and bonds of the systemic banks that have capital of RUB100 billion (US$1.6 billion). The interest rate should at least cover the CPI inflation rate. On 1 October 2014, nine banks had already met the criteria. Banks that receive these deposits are expected to finance government-approved investment projects.

    (3) Another RUB300 billion will be channelled through the NWF to Vnesheconombank to provide credit to the real sector.


    About 13.9% of the anti-crisis plan (RUB320 billion) will go to direct support of real sectors: RUB200 billion in state guarantees for systemic companies, RUB50 billion for support of agricultural enterprises, and RUB10 billion for the transport utilisation programmes. The government approved a list of 199 systemic enterprises eligible for state guarantees, among them all major Russian companies.

    Companies on the list produce 70% of GDP of Russia. These steps mainly address the development of sustainable enterprises given lower domestic demand, an unfavourable global environment, and high credit costs. Some administrative measures are expected to smooth state procurement, which was hit by the exchange rate crisis.


    Another 12.9% (RUB296 billion) is earmarked for social support, including pension indexation higher than the federal budget law envisaged, RUB52.2 billion for easing the labour market, RUB30 billion for payments for registered unemployed, and RUB16 billion for additional medical support.


    About 7.0% (RUB160 billion) will be transferred to the regions through budget loans.

     Source: IE Singapore

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