Maxim Tovkailo
The Government prepares new anti-crisis package
The Government is now drafting a new bailout plan that stipulates additional support for the financial sector and domestic industries. Prime Minister Vladimir Putin chairs almost daily meetings on the subject.
The latest meeting held Friday, December 5, lifted the veil of secrecy off the new bailout plan. The banks will be able to use mortgage bonds to replenish liquid assets, while businesses will cut expenses due to slowing growth in natural monopoly tariffs.
However, the Government does not plan to completely freeze tariffs next year.
BAILING OUT CRISIS-STRICKEN INDIVIDUALS
Virtually all Government members were present at the December 5 meeting. In his introductory speech, Putin did not mention the bailout plan focusing instead on the Thursday question-and-answer session. The Prime Minister asked his subordinates to fulfil his promises to the population. A new measure for supporting the banking sector was linked with the need to help private individuals who may face rising unemployment and wage cuts.
The state will help banks to cope with "bad" mortgages whose borrowers have either lost their jobs or are suffering from wage cuts. Bankers will be able to restructure such debt and receive guarantees from the Federal Agency for Housing Mortgage Lending, which will reimburse them even if their clients default. The agency and the concerned banks will finalise the list of documents due to be submitted by borrowers, before the year is out. Individual debt restructuring deadlines will be stipulated. Insolvent borrowers will be allowed to repay the loan principle only and interest in the future.
The Government will also help those banks which are not prepared to restructure their clients' debts. In these cases the above-said agency will buy mortgages to replenish the banking sector's liquid assets. For this purpose, the agency will receive 200 billion roubles ($7.2 billion) from the Government. The agency believes that small and medium banks will mostly divest themselves of mortgages, while major banks will receive debt restructuring guarantees.
The banks would find it unprofitable to discard mortgages because they can use them to issue mortgage bonds, guaranteed by the above-said agency, and can exchange them for the Central Bank's financial resources. For instance, they can build short-term liquid assets during repurchasing auctions. The Government estimates that mortgage bonds will increase the banking sector's liquid assets by 500 billion roubles ($18 billion).
IS IT POSSIBLE TO REDUCE THE APPETITES OF NATURAL MONOPOLIES?
The Government is moving to implement another multi-faceted anti-crisis measure that will curb natural monopolies' skyrocketing tariffs. The issue of reducing the "tariff appetites" of natural monopolies was first raised in late November by the Council on Competitiveness and Entrepreneurship.
The newspaper's sources said the discussion was initiated by Deputy Prime Minister and Finance Minister Alexei Kudrin. At that time, Vladimir Putin did not support Kudrin's noble intentions, and said natural monopolies had to charge higher tariffs for their services because they would otherwise fail to implement 2009 investment programmes. This primarily concerned the plans of energy giant Gazprom and transport monopoly Russian Railways.
During his live question-and-answer session, the Prime Minister was not so categorical and said tariffs could slow down. He told the Friday meeting that tariffs would increase by a smaller margin along with budgetary aid for natural monopolies. An official who attended the meeting said the Government had decided not to freeze tariffs but to revise specific deadlines for raising natural monopolies' tariffs. Next year, such tariffs are to be raised in January and July. Although the January price hike will not be postponed, the Government may decide not to raise tariffs next July if the global crisis continues to pressure the Russian economy.
The bailout plan does not only stipulate mortgage and tariff measures. The Government will continue to support various economic sectors. However, the newspaper's source declined to comment on such measures.
The new bailout plan will hinge on various initiatives that were discussed by First Deputy Prime Minister Igor Shuvalov with business community representatives in the last two weeks.
Due to plunging global oil prices, the Government is still unprepared to provide the oil sector with additional benefits.