Govt starts monitoring debt burden of Russia’s largest firms

MOSCOW, Apr 1 (PRIME) -- The Finance Ministry has started monitoring of the debt burden of Russia’s largest companies to prepare recommendations to curb it, Deputy Minister Vladimir Kolychev told reporters on Monday.

“We should think and envisage recommendations on the level of debt burden, including for private companies, which would deprive them of state support in a situation of stress in case they don’t comply with them.” he said, adding that the ministry is already monitoring the burden of companies with an annual revenue exceeding 1% of gross domestic product (GDP).

“There are about 10 companies, including state and private firms,” he said.

The ministry is now collecting company reports to accumulate a monitoring history and make decisions using it.

The ministry also suggested allocating money from the National Wealth Fund for easy-term loans to importers of Russian products after the fund’s amount exceeds 7% of GDP.

“Our innovation is that we are thinking about using the second part of this component (money above 7% of GDP) to finance buyers of our non-energy exports at more preferential or more competitive than those of other countries, I mean provision of loans to them at rates lower than we can afford now,” he said.

The ministry will prepare the regulatory acts until the end of the year, as the fund will exceed the threshold of 7% of GDP in late 2019, he said.

The combined amount of Russia’s domestic and foreign borrowing will amount to 1.3–1.45 of GDP per year until 2025, and will fall to 0.8% of GDP per year, he said, adding that borrowing to cover structural budget deficit will amount to 0.5% of GDP, while sovereign debt servicing will account to 0.8% of GDP until 2025, Kolychev said.

But after 2025, budget will be completely balanced given an oil price of U.S. $40 per barrel, and the ministry won’t have to cover deficit keeping new debt at 0.8% of GDP, he said.

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