By Dmitry Butrin, Irina Granik
President Dmitry Medvedev presided over a high-level conference yesterday devoted to the financial situation. The first such anti-crisis meeting to be held in 2009 decided to take measures to "additionally capitalise" the banking system in the next two weeks and determined the size of state guarantees of loans to the defence industry (70% of the loan) and sector-relevant industrial enterprises (50%). The Kremlin and the White House are still prepared to spend unlimited amounts to treat the "confidence shock" in the economy.
President Medvedev conducted a conference at the Gorki-9 residence yesterday. The declared topic was "the development of the financial sector". In reality, the meeting discussed additional anti-crisis measures to stabilise the banking system and industry. Taking part in the meeting were Prime Minister Vladimir Putin, First Deputy Prime Minister Igor Shuvalov, Chief of the Government's Staff and Deputy Prime Minister Sergei Sobyanin, Minister of Economic Development Elvira Nabiullina, Finance Minister Alexei Kudrin, Head of the Central Bank Sergei Ignatyev and his First Deputy Sergei Ulyukayev, the heads of four state-owned banks - Sberbank, VEB, VTB, and Gazprombank - the Head of the Presidential Executive Office Sergei Naryshkin, and Presidential Aide Arkady Dvorkovich.
On this occasion, the President did not criticise the Government (see Kommersant of January 12) but, on the contrary, praised what Prime Minister Putin's team has already accomplished. "The priority measures taken recently have helped to stabilise the situation in the banking sphere," Mr Medvedev said. He mentioned that the banking system had already received 950 billion roubles in subordinated credits. However, while the short-term liquidity problem has been solved, additional measures will be required for long-term liquidity, including "additional capitalisation of the banking system". Finance Minister Alexei Kudrin, who spoke after the President, promised that the Finance Minister, the Economics Ministry, and the Central Bank would develop the corresponding measures within two weeks. Central Bank President Sergei Ignatyev said that households had deposited 500 billion roubles in banks in December (October saw an outflow of 350 billion roubles).
The Deputy Prime Minister did not specify what additional capitalisation measures would be taken, but named the sum already allocated for the "rehabilitation" of the major banks: 146 billion roubles, including 114 billion roubles from the Bank of Russia and 32.2 billion roubles from the Deposit Insurance Agency. So far, the Deposit Insurance Agency and the CB have rehabilitated only 15 banks.
The President was more concerned with the crediting of industrial enterprises. Dmitry Medvedev recalled that the Bank of Russia was already in the process of reviewing the terms of refinancing against collateral. However, he said that "many industrial enterprises still find it difficult to access bank loans". "We are talking about high interest rates and the virtual lack of opportunity to obtain loans," the President explained. The Government ministers admitted, however, that the psychological aspects of the crisis were important. "It is essential to remove the shock of mistrust in the banking system," Mr Kudrin told the President.
Sergei Ignatyev, however, reassured those present by announcing a slight growth (1.3%) of the loan issues in December 2008 (allowing for currency rate fluctuations). He said a growth of at least 2% was necessary. Alexei Kudrin also appeared to be quite calm, reminding those present that the Government had decided to support 294 strategic enterprises. The next meeting of the Government would draw up a list of defence industries in need of support; their number has not yet been determined. The Government would also issue a resolution on state guarantees of loans to defence enterprises covering 70% of the sum of the loan, and 50% of the sum of the loan to sector-relevant enterprises. In addition, a procedure for granting guarantees to enterprises out of the regional budgets would be determined.
Judging from the tone of the meeting at Dmitry Medvedev's residence, the course for practically unlimited support of the needy sectors (at least at the level of declarations) that the Russian Government announced in October-November 2008 and was slightly adjusted in December by Prime Minister Vladimir Putin, who called for an economy of budget assets, will remain in place. The number of facilities enjoying government support, which seemed to have reached its peak at Government meetings in mid-December, is increasing again. It transpired yesterday that the Ministry of Industry and Trade was preparing a list of priority investment projects in metallurgy, pipelines and some other sectors (14 sectors in all) which the state is prepared to bail out. They include the Eastern Siberia-Pacific Ocean and Nord Stream pipelines. The list will be discussed at a meeting of the Ministry of Industry and Trade Departmental Commission before the end of January 2009.
The cost of the "investment package" is still unknown, but the sum earmarked by the Kremlin and the White House for bailout operations has already topped 10 trillion roubles, about 24-25% of the GDP. The expected discussion of budget revenue parameters according to the worst-case scenario presented by the Economics Ministry ($32 per barrel of oil, 34 roubles to the dollar - see Kommersant of January 13) did not take place yesterday, at least not in public.
