Russia 090423 Basic Political Developments

National Economic Trends

Russian international reserves up $0.9 bln in week

http://en.rian.ru/business/20090423/121258555.html

MOSCOW, April 23 (RIA Novosti) - Russia's gold and foreign currency reserves increased by $0.9 billion, to $384.8 billion, in the week of April 10 - April 17, the Central Bank of Russia said Thursday.

Kudrin Says Reserve Fund to Be Spent by '10

http://www.themoscowtimes.com/article/1009/42/376518.htm
23 April 2009 Bloomberg
Finance Minister Alexei Kudrin said Wednesday that the Reserve Fund would be "practically exhausted" in 2010, and the government will have to cut spending to trim a budget deficit that is estimated at 7.4 percent this year.

"The period of spending increases is ending," Kudrin told lawmakers. "In the coming years, we will have at least to keep spending at the current level for many sectors, but for some we won't even be able to do this, and programs will have to be reduced."

Russia's two sovereign wealth funds fell in March to a combined 7 trillion rubles ($206.1 billion) as the government began transferring money to cover its first budget deficit in a decade. The government expects revenue to drop by 30 percent this year as the economy enters its first recession in 10 years and tax revenue tumbles on slowing demand at home and abroad.

The Reserve Fund fell to 4.1 trillion rubles at the start of the month, and the National Welfare Fund stood at 2.9 trillion rubles, according to the Finance Ministry. The government is forecasting a 2.2 percent economic contraction this year after a decade of expansion.

The revised budget could be changed to seek new funds to recapitalize banks should the level of bad loans in the banking sector exceed 10 percent, Kudrin said.

Overdue loans in the sector currently stand at 7.5 percent, Kudrin said in an interview with Vedomosti published Wednesday.

Central Bank expects Russia’s bank lending to go up 10-12% this year – Kudrin

http://www.itar-tass.com/eng/level2.html?NewsID=13865655&PageNum=0

MOSCOW, April 22 (Itar-Tass) -- The Central Bank of Russia forecasts an increase of the bank lending in the country by 10-12 percent, the Prime Tass economic news agency cited Russian Deputy Prime Minister and Finance Minister Alexei Kudrin as he told reporters on Wednesday.

According to Kudrin, “he had some difference forecasts, but he did not elaborate,” Prime Tass said.

The combined portfolio of Russia’s banks accumulated 18 trillion roubles (USD 1 = RUB 34.05) up to date, Prime Tass cited the minister as saying. The combined portfolio consists of personal loans and loans to non-financial companies.

In Kudrin’s words, of the total corporate loans stood at twelve trillion roubles, while personal credits amounted to six trillion roubles, Prime Tass said.

According to the finance minister, the combined portfolio of loans grew by 35 percent in 2008 and went up by more than 50 in 2007, Prime Tass said.

Cash in circulation down 16.3% to $107.5 bln in Russia in 1Q09

http://en.rian.ru/business/20090422/121253776.html

MOSCOW, April 22 (RIA Novosti) - The volume of ruble cash in circulation in Russia declined 16.3% to 3.7 trillion rubles ($107.54 billion) as of April 1, compared to 4.4 trillion rubles ($128.4 billion) as of January 1, the Bank of Russia said on Wednesday.

The decrease was caused by the population converting rubles to foreign currencies amid the ruble's devaluation.

The figure had increased 6% year-on-year in Russia in 2008.

Russia’s inflation reaches 6% by April 20 – statistics

http://www.itar-tass.com/eng/level2.html?NewsID=13865607&PageNum=0

MOSCOW, April 22 (Itar-Tass) -- Russia’s inflation had reached 6.0 percent by April 20 since the beginning of the year, the Prime Tass economic news agency said on Wednesday, quoting an official report of the Federal State Statistics Service.

Retail prices increased by 0.2 percent in the week from April 14 to April 20, Prime Tass said, adding that the indicator had made up 0.6 percent since the beginning of the current month (from April 1 to April 20).

An average daily increase in prices was 0.028 percent in the reporting period, Prime Tass quoted the statistics document.

In the week from April 14 to April 20, retail prices for frozen fish, eggs, tea, and infant milk powder went up by 0.7-0.9 percent, Prime Tass cited the report of the Statistics Service as saying.

In the reporting period, prices of pork, canned meat, and some kinds of confectionery grew by 0.4 percent, Prime Tass said.

At the same time, average prices of sunflower oil decreased by 0.9 percent in the reporting period, Prime Tass said, adding that prices of granulated sugar, poultry, cheese, buckwheat, millet, flour, milk and some kinds of dairy products went down by 0.1-0.4 percent.

In the week from April 14 to April 20, fruit and vegetable prices edged up by 0.8 percent on average, Prime Tass said, adding that prices of cabbages increased by 4.2 percent, prices of onions grew by 1.8 percent and prices of carrots went up by 1.4 percent.

In the designated period, the Statistics Service registered a slowdown of gasoline prices by 0.2 percent and a decrease of diesel fuel prices by 0.5 percent, Prime Tass quoting the statistics report as saying.

The report was drafted on the basis of weekly monitoring of retail prices for 61 socially important goods and services, which the Federal State Statistics Service carries out in 264 Russian cities and towns on Mondays.

On Wednesday, Russian Prime Minister Vladimir Putin said that the country’s inflation rates had declined recently.

Russia’s inflation was 2.4 percent in January, 1.7 percent in February, and 1.3 percent in March, Putin said, quoting forecasts of the Economic Development Ministry. The country’s inflation rate will make up from 1.1 to 1.2 percent in April, the prime minister said at Wednesday’s conference on economic issues.

The Central Bank’s forecasted inflation at 13 percent in 2009, Prime Tass recalled, adding that last year’s inflation was at 13.3 percent.

Russia's Putin unveils plan to aid small businesses

http://www.prime-tass.com/news/show.asp?topicid=68&id=455991

MOSCOW, Apr 22 (Prime-Tass) -- Russian Prime Minister Vladimir Putin unveiled a plan to aid small businesses while speaking at the All-Russian Small- and Mid-Sized Business Forum on Wednesday.

In particular, Putin proposed that companies whose revenues are less than 60 million rubles per year should be allowed to switch to a simplified taxation regime that reduces the tax burden on small businesses. At present, the threshold is set at 30 million rubles.

Putin also said that small businesses should be allowed to deduct aid provided by regional and municipal governments from their taxable income.

He went on to say that the government would allocate an additional 15 billion rubles to subsidize regional programs aimed at supporting small businesses.

In addition, Putin proposed setting the requirement for collateral for bids at tenders and auctions for government purchases from small businesses at 2% of the starting price. At present, the figure is set at 5%.

Putin also said that the government intended to require banks that receive government aid to lend to small- and mid-sized businesses.