Ministry of Finance of the Russian Federation
Ministry of Finance of the Russian Federation
11.07.2011

Statements of Deputy Head of the Government of the Russian Federation – Finance Minister of the Russian Federation A. Kudrin

 

Kudrin says EurAsEC to consider Belarus’ commitments under loan deal in Nov

LONDON, July 11 (Prime-Tass) -- The terms of lending to Belarus may be revised if the county fails to meet its commitments under the loan agreement; the decision may be taken in November, Russian Deputy Prime Minister and Finance Minister Alexei Kudrin told reporters on Friday.

The next installment of the loan will be considered in November after the EurAsEC Bailout Fund analyzes Belarus’ meeting its commitments.

Asked whether lending terms could be changed, Kudrin said he did not rule out modifications.

He said import and price restraints, as well as multiple exchange rates were inadmissible during a crisis. He said administrative measures could not be considered measures to overcome the crisis. “It seems to me the Belarusian authorities fail to take sufficient measures to surmount the crisis,” Kudrin said.

Kudrin noted that Belarus had accumulated a “fantastic” current account deficit of 16% of GDP, which makes the Belarusian economy unstable.

According to him, the main instrument to change the balance was to attract additional currency to buy imported goods, whereas exports are not good enough to make money.

Kudrin noted that Belarus had refused to devaluate currency for three years and filled the gap with foreign credit.

He reiterated that privatization could provide additional resources for the economy. “If the government is not ready to use this reserve, I believe credit support to be less justified,” Kudrin said. “Belarus should be assisted only after it starts acting.”

 

60/66 plan for petroleum products to be implemented, measures to be applied during transitional period - Kudrin

LONDON. July 11 (Interfax) - The 60/66 plan for merging duties for dark and light petroleum products will be introduced but several measures will be applied during a transitional period, Russian Deputy Prime Minister and Finance Minister Alexei Kudrin told journalists in London.

"60/66 will be implemented. There will be measures, I am afraid to comment whether these measures would be compensation or gradual. We are looking for a solution so that companies' operations can continue and stability be maintained. Nonetheless, there will be a move to this plan," he said.

The Finance Ministry has returned to the issue of equalizing the export duties on light and dark products stages. "This issue is now being examined in my ministry. We are preparing conclusions on this issue once more. I will hold one more meeting on that score," he said.

The export duties need to be equalized, he said. "I believe this switch is correct. There has been some delay in making a decision because there has been no final calibration of a certain transition period for the companies that stand to lose the most from this switch," Kudrin said.

"The first proposal, which was virtually ready, was cause for concern due to its effect on several companies, primarily those like TAIF. This is a major cost for those companies that could put the stability of their operations in doubt," he said.

The goal is to avoid harming major, leading companies, he said. Although those companies will face some additional burden until they realign their operations, the new treatment should not be so burdensome that it undermines their stability.

"We are revisiting a transition period," Kudrin said.

At a meeting on Friday, Prime Minister Vladimir Putin called for gradual equalization of the export duties and directed that the relevant proposals be submitted to the government within two weeks.

Project 60/66 was drawn up by the Energy Ministry in January 2011. It calls for setting export duties on both light and dark products at 66% in 2011, with no transition period. Simultaneously, the export duty on crude oil would be lowered by reducing the percentage of the difference between the oil monitoring price and the oil cutoff price to 60% from 65%.

The export duties on dark and light oil products are currently being equalized in stages. Beginning on January 1, 2011, the export duty on dark oil products rose to 46.7% of the crude oil export duty and that for light oil products fell to 67% from 70%. The percentages are to change to 52.9% and 64% respectively in 2012 and to 60% for both in 2013.

 

Russian govt plans to privatize second 10-pct stake in VTB 2012 - Kudrin.

LONDON, July 9 (Itar-Tass) —— The Russian government plans to privatize the second ten-percent stake in the bank VTB in 2012, Deputy Prime Minister, Finance Minister Alexei Kudrin said at a news conference at the end of his working visit to London.

Kudrin said this year the government had no plans to privatize the second ten-percent stake in the VTB.

"We are preparing its privatization in the first half of next year, but it will depend on market conditions,” he said. “We will always look for very favorable terms. And preparation takes time. It's going to happen without undue haste."

In the course of his visit to London Alexei Kudrin met with his British counterpart, George Osborne, co-chairman of the Russian-British intergovernmental committee on trade and investment, UK Secretary of State for Business Vince Cable, as well as Lord Mayor of the City of London Michael Baer and representatives of British businesses. Kudrin said that at the meetings the participation of British companies in privatization in Russia was actively discussed. However, he also pointed to the "reverse process."

"Russian companies also want to invest in the UK," he stressed.

"We agreed we need understanding and a two-way street,” Kudrin said. “Of course, from Britain there are probably more investments. But the British economy is also in need of investment – its financial and other sectors. The rate of growth of the British economy today also requires some support, an impetus. And, of course, it is up to businesses to choose."

As Kudrin said, "the British side is open to cooperation and investment in the UK. That is why today our cooperation is achieving a new level – a two-way street. This is a new level of our relations," Kudrin said.

 

Kudrin: Belarus taking no effective anti-crisis measures

London, July 9 (Interfax) - Russian Finance Minister Alexei Kudrin has argued that the government of Belarus is not taking any effective measures to end the country's current economic crisis.

"I have the impression that monetary authorities, including the central bank and government, are not taking adequate measures to end the crisis," Kudrin told reporters in London.

Price regulation, restricting market mechanisms in foreign trade and differences in currency exchange rates means that no economic methods are being used to overcome the crisis and that "the disease is being driven deeper inside," he said.

"Of course, we won't be able to see such measures as measures to stabilize the Belarusian economy and rescue it from its crisis," Kudrin said.

Moreover, Belarus exports a lot less than it imports and the difference has become "fantastic" over the past three years, the minister said.

"Such growth of the difference between exports and imports is excessive and is destabilizing the Belarusian economy. The current account deficit has reached an annual level of 16% of GDP. No leading developed country can afford or allow this," he said.

Nor has the government resorted to a phased devaluation of the national currency as a way to boost exports, Kudrin said.

"As this hasn't been happening and loans have been used to eliminate this imbalance, the imbalance hasn't been reduced. The problem has been put off," he said.

"Today an attempt has been made to end this imbalance via a currency crisis and in an uncontrollable way, and the devaluation is producing its results, but it can't produce a final result because a market exchange rate hasn't been set," he said.

A market exchange rate is the only way to put the economy on a new basis, he argued.

If there is no such rate, Belarus will have to impose administrative restrictions on imports and on access to foreign currency. "But that would limit the resources of the economy and the resources for economic growth. The current administrative measures are not serving to surmount the crisis," Kudrin said.

Belarus' lack of effective anti-crisis measures is also depriving the country of help from the International Monetary Fund, he said.

"Help will only come after Belarus itself begins to take measures to stabilize its own economy. We can't all the time be the source of redemption of sins that the government itself is committing," he said.

 

Kudrin sees transition period for oil tax reforms

LONDON, July 8 (Reuters) - Russian Finance Minister Alexei Kudrin said on Friday that it would take time to reform Russia's oil taxation system and that companies should not suffer unduly from the process.

Speaking in London, Kudrin suggested that transitional measures should be put in place to soften the impact of the tax reforms, but he declined to go into detail.

"We need a transitional period from companies that would suffer as a result of the reform," said Kudrin, who did not attend oil tax talks in Russia on Friday. "It is not our task to inflict suffering on major companies."

 

Kudrin: Transition measures needed for refineries before new oil tax

LONDON, Jul 8 (Dow Jones) -- Russia's new oil taxation regime should not severely harm the refining companies, and some transitional measures should be taken to limit any damage before the new taxes are introduced, Russia's finance minister Alexei Kudrin said Friday.

However, he declined to say when the new taxation aimed at increasing crude production may be introduced.

"We should not threaten the existence of those large companies" he said, naming Tatarstan's huge refinery TAIF as one of those companies.

Speaking in London, Kudrin admitted that Russia's budget policy "has eased" recently and he said that the country needs structural reforms in the next three years, for which a new president and the government "should have a clear mandate".

Kudrin also said the government as a shareholder is seeking to "influence" the boards of state-owned companies to limit their foreign borrowing.

"We are not planning to introduce special tax measures to regulate the borrowing, but other mechanisms are possible", he said.

Kudrin also harshly criticized the government of neighboring Belarus, which received a Russia-led fund bailout loan in June.

Kudrin said Minsk is not doing enough to stabilize its economy, and called for the introduction of a market-defined Belarus ruble exchange rate, which is currently defined by the central bank of the country.

Kudrin also said the Belarussian government should privatize its companies, and that the current "steps to stabilize the economy are not enough", adding that it's difficult to believe that the International Monetary Fund, from which Minsk is seeking another loan, "sees things differently".

 

Russian companies may draw over 40 bln dlrs by 2014 - Kudrin.

LONDON, July 9 (Itar-Tass) —— Deputy Prime Minister, Finance Minister Alexei Kudrin has agreed with the estimates Russian companies will be able to draw on the world's stock markets more than 40 billion dollars by the end of 2013. He made a statement to this effect on Friday in reply to a question from Itar-Tass at a news conference following a working visit to London.

The forecast, which suggests that by 2014 Russian companies will be able to attract from the world's stock markets at least 40 billion dollars, was made last Thursday by the Citigroup’s director of equity markets for Russia and the CIS bank, Steve Kale. He said the Russian government’s long-term plan for the privatization of over a thousand companies would contribute to this.

"If we privatize packages, it will be fundraising not by companies, but by the budget,” Kudrin said. “We sell our package, in this sense, the companies do not receive money. If we are to talk about what our companies can draw from the world markets with initial public offerings (IPO), in the form of shares and other securities, then yes, the 40 billion before the end of 2013 will be attracted easily."

"The capacity of investments in our companies from the standpoint of the second half of 2011, the whole of 2012 and 2013, estimated at 40 billion dollars is an achievable figure. The privatization process will work as a boost. By itself it will not attract anything, but private investors will start coming into the companies, this will increase the attractiveness of companies and their ability to attract new investment. Moreover, the new shareholders, as a rule, do that to develop their companies further," Kudrin said.