By Natalia Galimova
Russia's Finance Ministry will be authorised to accredit rating agencies, organisations that assign credit ratings for issuers of certain types of instruments, such as companies, national and regional governments, or non-profit organisations, thus assessing the issuers' credit worthiness.
As Prime Minister Vladimir Putin told a Government Presidium meeting on Monday, being accredited in Russia would mean that the country officially recognises the agency's assessments and conclusions as correct and trustworthy.
The Prime Minister entered the conference room carrying a bunch of flowers for Healthcare Minister Tatyana Golikova as it was her birthday. After the birthday greetings the Presidium members went over to business.
Mr Putin gave instructions to Deputy Prime Minister Igor Sechin to submit later in the day a draft resolution to allocate 2 billion roubles to subsidise bank interest for individuals taking out loans to buy Russian-made cars, for him to sign. This is part of the Government policy to support the domestic auto industry.
"If we say we subsidise two-thirds of the CBR refinancing rate for people taking out car loans, it means we'll pay the bank 8% of the interest the person owes to the bank," he explained.
Mr Putin went on to say: "The Finance Ministry will be authorised to accredit rating agencies - groups that assess the creditworthiness of private companies and state entities. We all realise how much influence rating agencies have, and how much their mistakes or, worse, abuses, might cost us."
Indeed, the ratings assigned by these agencies, mainly the three largest international ones, S&P, Moody's and Fitch, seriously affect investor decisions.
Last week, Fitch downgraded Russian Railways and 14 Russian banks, and changed the outlooks for Gazprom and Rosneft from Stable to Negative. Moscow's ratings were lowered, too, and the outlook for St Petersburg went down from Stable to Negative. And finally, the agency downgraded Russia's country rating, with a Negative outlook for long-term ratings.
Admittedly, Finance Minister Alexei Kudrin said then he did not envision any serious consequences of the rating action for Russia. However, a mere five days after it, the Russian Government announced the rating agencies would now require accreditation.
According to Mr Putin, "the accreditation will mean state recognition of the reliability and quality of an agency's assessment and how good and precise its judgment is. This kind of certification will give investors more reliable guidelines and eliminate the absurd practice of uncontrolled and uncertified agencies assessing others."
Despite Mr Putin's assurance that "that the accreditation procedure should be voluntary and as transparent and simple as possible," the very requirement will give the Government pressure tools against these agencies. For example, one of them could be denied accreditation. Or, if an agency doesn't want to apply for accreditation, it could be labelled untrustworthy and its judgment unreliable.
It is still unclear what criteria will be used to assess the rating agencies. Mr Putin also said the Government was "interested in the emergence of strong and reliable domestic rating services, ones that will fully take into account the specifics of the local market and offer quality and affordable services."
The Government Presidium also approved amendments to the Criminal Code and the Criminal Procedure Code introducing criminal responsibility for mala fide operation on the securities market. The perpetrators will be convicted to up to seven years in prison.
Mr Putin did not miss a chance to relax and make a joke. After hearing out Agriculture Minister Alexei Gordeyev's complaint that milk products consumption had dropped 5%, he said, why didn't you bring some for us today, you thrifty Minister... "I wasn't prepared for this turn," Mr Gordeyev said, somewhat abashed. "You should be prepared for any turn," Mr Putin told him.
One can imagine Mr Gordeyev "prepared for any turn" the next day, entering the conference room carrying several containers of milk, cheese and yogurt.
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What repercussions could the decision to accredit rating agencies have?
Vasily Solodkov, Director of the Banking Institute of the Higher School of Economics:
"As the Prime Minister has said, the accreditation will mean state recognition of the agencies' good practices. That is, the accreditation could be withdrawn for an incorrect rating action. This could be a pressure tool.
"This is also a bureaucratic procedure. And finally, no accreditation can help resolve the main problem with the agencies: neither of them had been able to predict the financial crisis."
Yevsei Gurvich, Head of the Finance Ministry's economic expert group:
"This policy is aimed at selecting only responsible agencies to rate Russia and at developing this sector domestically. Rating agencies are partly to blame for the financial crisis because they failed to point out the economic risks on time. Pressure? There is no point in pressuring international agencies, and Russia is unlikely to do it anyway because it would send Russia's ratings down and tar its international image. I think these agencies will have no problem getting accreditation in Russia."