Rossiiskaya Gazeta: “Government to Subsidise Regions in December”
Regions to receive last subsidies in 2008
Pyotr Skobelev
On December 10, the Government will hold an extended meeting to discuss 20 billion rouble ($719 million) subsidies to Russian regions for the last time in 2008.
The last federal tranche to Russia's constituent entities is not linked with the global financial crisis in any way, since Russian territories receive such subsidies each year. The allocations come from the regional budget balancing fund, which topped 60 billion roubles ($2.1 billion) this year.
A source in the Government said the Ministers could decide to support the regions in some other way.
Prime Minister Vladimir Putin told a recent meeting on regional development issues that regional budgets should receive 0.5% of federal profit tax proceeds and all petroleum, oil, and lubricants (POL) excise tax proceeds.
On December 10, the Cabinet will allocate 5.8 billion roubles ($208.6 million) to 27 regions that received minimal budgetary funding between January and October 2008. Moreover, the Government will set aside 3.4 billion roubles ($122.3 million) worth of public sector wages for another 12 regions.
Eight more regions will receive 2.5 billion roubles ($90 million) for POL expenses and another 7.9 billion roubles ($284.1 million) for specific projects.
Never before has the Government provided such massive assistance to basic regional companies, which sometimes have to sacrifice their economic independence.
On December 9, Prime Minister Putin and Vneshtorgbank CEO Andrei Kostin discussed the future of Russia's largest jet-engine manufacturer, Saturn Scientific and Production Association (NPO), which is now developing the SaM-146 power plant for the Sukhoi Su-100 SuperJet medium-haul airliner.
During his recent trip, Putin and Saturn owners agreed that Oboronprom, the main state-owned arms exporter, would buy corporate shares. In exchange, the deprivatised company will receive 10 billion roubles ($360 million) for debt refunding purposes.
"On December 9, we allocated the first 3.5 billion rouble ($126 million) tranche to Saturn. This will allow us to settle previous loans," Kostin told Putin.
He said there were plans to channel two more tranches and that the entire loan would total 11.5 billion roubles ($413.6 million). Between January and November 2008, the VTB group credit portfolio swelled by 65%, from 1.2 trillion roubles ($43.1 billion) to 2 trillion roubles ($72 billion).
MDM Bank CEO Oleg Vyugin could not boast a sizeable credit reserve. Although the bank has stopped loaning money to medium-size and large businesses, small businesses continue to receive 300 million rouble ($10.8 million) loans from it every week.
MDM Bank, one of the 30 largest national banks, has every chance of improving its position.
Vyugin told Prime Minister Putin that his bank planned to merge with URSA bank, thereby establishing the fourth largest Russian bank in terms of its capital.
"MDM, which is a corporate bank, has strong positions in European Russia. URSA is a retail bank operating in Siberia and the Urals region. We do not duplicate each other. The upcoming merger will create a nationwide bank," Vyugin told Putin.
"We maintain normal working relations. The Central Bank wants to provide liquid assets, while the Government should allocate long-term funding. We support this stance," Vyugin said.
