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MOSCOW, July 7 (Itar-Tass) —— The Russian government will determine key aspects of the budget policy in 2012-2014 at its meeting on Thursday, July 7.
Vice Prime Minister and Finance Minister Alexei Kudrin will talk about the main areas of the budget policy and key parameters of the federal budget.
According to the Finance Ministry, the federal budget deficit will be 2.7 percent of GDP in 2012-2013, and 2.3 percent in 2014. Budget revenues are projected to be about 10,615 billion roubles (18.4 percent of GDP) in 2012; 11,674 billion roubles (18.4 percent) in 013, and slightly over 12,631 billion roubles (17.9 percent of GDO) in 2014.
Federal budget revenues in 2011 are expected to exceed 10,303 billion roubles (19.3 percent of GDP). “The 2011 budget may be corrected one more time, but for the time being we stick to these figures,” a government official told Itar-Tass.
Budget expenditures in 2011 may exceed 11,022 billion roubles (20.7 percent of GDP).
Prime Minister Vladimir Putin said earlier that the federal budget deficit might be less than 1 percent in 2011 and zero in 2012-2014.
“We will most likely have a deficit but it won’t be as big as was announced earlier, I think 1.5-1 percent, may be less than 1 percent,” the prime minister said at a meeting on the main aspects of budget policy in the next three years in late June.
“I think that we will have to do everything necessary in the projected period [2012-2014] in order to reduce the deficit to zero,” Putin said.
He said earlier that the budget deficit would remain in the near future and the government could not give up the austere budget policy and spending cuts.
“The macroeconomic dynamics are quite favourable, and we all know about that. But we should understand that the federal budget deficit will remain in the near future and we cannot give up the strict budget policy and spending curtailment efforts, Putin said last week.
“Now that we are drafting a three-year budget, we should be very careful with additional funding for current federal programmes,” he said.
The prime minister called for “close work with regional and local authorities” as it would be “not enough to bring money to the contractors but it is also necessary to see how regions use this money”.
He recalled that funding for federal target programmes in 2001 has been increased to 923 billion roubles.
According to Kudrin, Russia’s budget deficit in 2011 will be 1-1.4 percent.
“If the price of oil exceeds 105 U.S. dollars [per barrel], the deficit can be smaller,” Kudrin said.
Russia’s federal budget deficit will be 1.3 percent of GDP in 2011, Deputy Finance Minister Tatyana Nesterenko said.
She said that culture and other expenditures might be increased, while financial assistance to regions might be reduced.
In 2012, the federal budget deficit will be 2.3 percent of GDP with the oil price of 93 U.S. dollars per barrel or 2.5 percent with the oil price of 90 U.S. dollars per barrel.
Russia can get a deficit-free budget in 2012 only if the average annual price of oil is 120 U.S. dollars per barrel, but the probability of that is very small, Kudrin said earlier.
“If the average price is 120 [U.S. dollar per barrel], there will be zero deficit. These are my [personal] estimates because the budget is still in the works,” he said.
A balanced budget could be achieved sooner with oil prices of 115 U.S. dollars per barrel but has been postponed “by the adopted decisions on defence spending and insurance premiums”, Kudrin said.
The minister noted that high energy prices on the world markets would not give Russia a chance to get a deficit-free budget before 2015.
At the same time, he thinks there is no such need. “We want [this to happen] within three years, gradually, i.e., 2012, 2013 and 2014 are years of budget consolidation so that we can come to a balanced budget in 2015,” he said.
Kudrin said that a balanced budget would not be relevant during parliamentary and presidential elections in Russia in 2011-2012.
The minister said he did not expect big spending risks for the budget in this connection, but at the same time advised the government against expecting favourable oil prices.
“We expect the price of oil next year to be lower than this year,” he said.
According to the latest forecast released by the Ministry of Economic Development, the average price of oil will be 93 U.S. dollars per barrel in 2012, and 95 U.S. dollars per barrel in 2013. The government has corrected the 2011 budget on the assumption that the oil price will be 105 U.S. dollars per barrel, which allows it to reduce the budget deficit to 1.4 percent of GDP.
The draft budget consists of three main parts. The first one lists the main aspects of the budget policy and the budget concept for the next three years. The second part contains the main parameters of the federal budget for there years. and the third part sets limits to budget appropriations to each ministry.
.Deputy finance minister to present key aspects of tax policy to govt July 7.
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MOSCOW, July 7 (Itar-Tass) —— Deputy Finance Minister Sergei Shatalov will present key aspects of tax policy at a government meeting on Thursday, July 7.
The Finance Ministry suggests reducing insurance premium rates from the current level of 34 percent to 30 and 20 percent for different categories of taxpayers, as has been proposed by President Dmitry Medvedev.
In 2010, the unified social tax was replaced with insurance premiums that were increased from 26 percent to 34 percent of the employer’s payroll fund. They are paid from salaries under 463,000 roubles.
However, on March 30, 2011, President Dmitry Medvedev instructed the government to reduce insurance premiums from January 1, 2012. “The burden of costs for higher pensions and healthcare is not the best solution, but there are no ideal solutions,” Medvedev said.
He believes that “the premium rate of 34 percent may be exorbitantly high”.
According to the president, a new rate should be “within the range close to the previous ones”.
The government has submitted two options after the president’s order given in Magnitogorsk in May. “The first option is to keep the rate of 34 percent only for big business and reduce current rates for small manufacturing and social businesses (to 16-20 percent), and to a level close to 26 percent for medium-sized business,” Russian presidential aide Arkady Dvorkovich said earlier this month.
“The second option is to reduce the maximum rate to 30 percent, and that for small manufacturing and social businesses from 26 percent [to 16-20 percent],” he said, adding that the first option would have priority.
He said that the decision to be made would be effective for two years.
Prime Minister Vladimir Putin said the government would be “looking for ways to reduce the fiscal burden on premium rates. We should not apply simple, linear solutions, shifting the problem from businesses onto the shoulders of ordinary citizens. Because we cannot and must not deviate from the social standards. We cannot follow the path of some of countries that have done so,” he stressed.
Putin instructed the Finance Ministry and the Ministry of Economic Development to present concrete mechanisms and parameters for cutting insurance premium rates from January 1, 2012.
In a bid to make up for a shortfall of revenues from lower insurance premiums, the government plans to increase the tax burden on the gas industry by 150 billion roubles in 2012, by 168.3 billion roubles in 2013, and up to 185.9 billion roubles in 2014, eventually moving on to a mechanism that will peg the tax on nature gas production to world hydrocarbon prices.
In the middle of 2010, the government commission on budget projections decided to raise the tax on the production of natural gas by 61 percent in 2011.
The tax will be further raised according to inflation in 2012 and 2013, Vice Prime Minister and Finance Minister Alexei Kudrin said back then.
The commission also decided to raise the oil production tax by 6.7 percent in 2012 and by 5.4 percent in 2013.
The Russian Finance Ministry suggested raising the oil and gas production tax in a bid to increase budget revenues.
“We believe it necessary to increase the natural gas production tax from next year,” head of the ministry’s department of tax and customs policy, Ilya Trunin told Itar-Tass.
In his opinion, a higher natural gas production tax will increase budget revenues by more than 51 billion roubles from 2011, by 60.4 billion roubles in 2012, and by 69 billion roubles in 2013.
A high oil production tax will generate an additional 78 billion roubles in budget revenue in 2012, and 147 billion roubles in 2013.
The decision to raise the mining tax and some other payments charged to oil and gas companies was prompted by the need to replenish the federal budget and make up for growing expenditures.
Experts also suggested making up for a shortfall in budget revenues from the reduction of insurance premium payments by raising alcohol and tobacco excise duties.
They proposed a standard way: to impose additional excises for alcohol and tobacco products. “In other words, it is proposed to shift this burden from business to people,” one of the experts said at a meeting with Putin earlier.
In 2009, a draft law that trebles tobacco excises in 2011 and raises them time and a half in 2012 was submitted to the State Duma.
One of the authors of the draft law, Viktor Zvyagelsky of United Russia, a member of the Duma Committee for Economic Policy and Entrepreneurship, said.
He said tobacco excises in Russia were unacceptably low. While the least developed EU countries, such as Romania, Bulgaria and the Baltic states, have a minimum excise of 1.28 euros (56 roubles) per pack, Russia’ s excise in 2009 was 3.54 roubles per pack of filter cigarettes and 1.77 roubles per pack of non-filter cigarettes on the average, which is 16-32 times lower. Turkey, China, Transcaucasian countries, and even Ukraine have much high tobacco excises than Russia.
However, Dvorkovich made it clear that the government would not raise tobacco and alcohol excise duties next year.
He said the excise duties would not be raised “more than was announced”.
At the same time, he could not say whether tobacco and alcohol excise duties would be raised in 2013 and 2014.
.Belarusian PM to visit Azerbaijan to discuss economic cooperation.
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BAKU, July 7 (Itar-Tass) —— Belarusian Prime Minister Mikhail Myasnikovich will visit Azerbaijan on Thursday, July 7, to discuss how to strengthen economic ties between the two countries.
According to government sources, the Belarusian prime minister’s two-day official visit will begin in Gyandzhi, a big industrial city in the west of Azerbaijan, where he will arrive from Minsk. Myasnikovich will have talks with senior officials from the city administration and attend the opening ceremony for a joint Azerbaijani-Belarusian-German venture at the local automotive manufacturing plant that will make municipal vehicles.
Myasnikovich will arrive in Baku on July 8 for talks with Azerbaijani President Ilkham Aliyev and Prime Minister Artur Rasi-zade to discuss a wide range of bilateral issues, including prospects for increasing Azerbaijani investments in Belarus, broadening cooperation in the petrochemical industry, as well as in fields of industrial cooperation, construction, science and technology.
It was reported earlier that the Belarusian prime minister would request a loan from Azerbaijan in order to stabilise the national economy at home. However Belarusian Ambassador to Azerbaijan Nikolai Patskevich denied thee reports.
The sides are expected to sign an agreement on the mutual recognition of higher education diplomas and an agreement on the exchange of land for the construction of the Belarusian Embassy in Azerbaijan and the Azerbaijani Embassy in Belarus.
Trade turnover between Azerbaijan and Belarus in the first five months of this year increased 7 times from the same period of last year to 475 million U.S. dollars.
More than 300 Belarusian enterprises supply their products to Azerbaijan. Belarusian tractors, trucks, crane trucks, optical equipment, and lifts are assembled in Azerbaijan.
Minsk believes that industrial cooperation, including detachable and towing equipment and harvester production, and railway carriage repairs, could be quite promising.
Comprehensive cooperation in the agro-industrial sector, supply of buses, MAZ trucks, agricultural machinery, and medicines are also among priority areas of joint work.
.Kyrgyzstan joins Eurasian Development Bank.
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MOSCOW, July 7 (Itar-Tass) —— Kyrgyzstan has joined the members of the Eurasian Development Bank /EDB/, where its share in the bank’s authorized stock is 100,000 dollars, Chairman of the EDB’s Council and Russia’s Deputy Prime Minister, Finance Minister Alexei Kudrin officially informed Kyrgyzstan’s Prime Minister Almazbek Atambayev.
The bank’s council confirmed in unanimous vote Kyrgyzstan’s application to join the agreement on the bank’ s foundation, the EDB’s statement reads. This international financial organization, which was founded in 2006 by Russia and Kazakhstan, unites also Belarus, Tajikistan and Armenia. The EDB’s authorized stock is above 1.5 billion dollars, and the bank’s objective is to support development of market economies of the member-countries, to favor their stable economic growth and expand mutual trade and economic relations.
Kudrin writes in the letter to Atambayev that “the bank’ s council asks Kyrgyzstan to have domestic state procedures necessary for fulfillment of the decision at the national level.” The EDB’s council stated that a term for consideration of investment projects in the Republic of Kyrgyzstan would be an agreement to be drawn between that country’s government and the EDB on conditions of the bank’ s presence in the territory of the republic and on this agreement’s coming into force in proper order.
.FAS warns against merger of Gazprom, KES Holding.
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MOSCOW, July 7 (Itar-Tass) — Organisation of a company, which will unite assets of Gazprom Energy holding and Viktor Vekselberg’s KES energy holding is not desirable from the point of view of the anti-monopoly legislation, Head of Russia’s Anti-Monopoly Service /FAS/ Igor Artemyev said on Thursday.
“I can say this is undesirable,” he said adding that “from the very beginning our position will be very watchful.”
On Wednesday, media referred to a source in the sector and informed about possible organisation of a joint venture between Gazprom Energy holding and KES Holding. The merger may result in a company which would own capacities of about 52 gigawatts. This would be twice more than the state-run Inter-RAO company has now, or over a quarter of capacities, which RAO UES used to have before it was restructured in 2008.
As FAS expresses its attitude to the possible deal, it will base its position on the strict limitation of competition in the market, Artemyev said.
“We, possibly, will try, if this is serious, to assist in structuring so that the Gazprom Company did not have a controlling stake in the new assets, for example,” he said.
.RF’s international reserves grow by over 3B dollars in June – CB.
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MOSCOW, July 7 (Itar-Tass) — Russia’s international reserves grew in June by almost 3.5 billion dollars to over 524.5 billion dollars as of June 1, the Bank of Russia reported on Thursday.
During six months of the current year, Russia’s gold and currency reserves grew by 45 billion dollars against 479.4 billion as of January 1.
The Central Bank reports that in February Russia’s foreign assets made 484.158 billion dollars, in March – 493.835 billion, in April – 502.460 billion, in May – 523.950 billion and in June – 521.092 billion.
.Third package of anti-trust amendments submitted to State Duma – FAS chief.
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MOSCOW, July 7 (Itar-Tass) —— The Russian government has submitted to the State Duma for consideration a third package of anti-trust amendments to the federal bill on amendments to the federal law On the Protection of Competition, the chief of the federal anti-monopoly service FAS, Sergei Artemiev, told a Russian-US anti-trust control conference.
“The government last week sent a third antimonopoly package to the State Duma,” he said. This legislative initiative by the FAS was approved after two years of discussions at a meeting of the presidium of the Government on June 28.
The amendments require, among other things, a reduction in the list of unconditional prohibitions and apply them only to horizontal agreements (cartels). Also, the use of criminal punishment for anticompetitive agreements will be clarified. The bill contains a more precise definition of forbidden coordination of economic activities.
Among other things, the amendments concern the market regulation of prices of petroleum products. A price formed in exchange trading cannot be considered monopolistically high if it does not exceed the level of world prices.
The first package of antitrust law was adopted in Russia in 2006, and second, the one introducing criminal liability for violation of antitrust laws, in 2009. The head of the FAS expressed the hope that the latest antitrust amendments will be the last ones.
“I hope that this is the last package in my lifetime. It is terrible when over a short period of time we have to introduce three antitrust packages that substantially change the law,” he said.
.Naftogaz Ukrainy pays Gazprom about USD 860 mln in June.
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KIEV, July 7 (Itar-Tass) — Naftogaz Ukrainy paid Gazprom about 860 million U.S. dollars for natural gas in June, the Naftogaz press service reported on Thursday.
The price of natural gas reaches about 297 U.S. dollars per 1,000 cubic metres of gas in the second quarter of the year.
Under the conditions of the additional agreement to the basic contract, which was signed by Naftogaz Ukrainy and Gazprom on April 21, 2010, the gas price is adjusted due to a discount of 100 dollars per 1,000 cubic metres.
The question of adjusting the price of gas for Ukraine can be considered after a future merger of Gazprom and Naftogaz Ukrainy, as follows from a Gazprom news release following the working meeting between Gazprom CEO Alexei Miller and Ukraine’s Minister of Energy and Coal Industry Yuri Boiko.
Miller said: “There is nothing new I can say. The question of adjusting the price of gas for our Ukrainian friends can be considered after the merger of Gazprom and Naftogaz Ukrainy.”
According to the Russian-Ukrainian gas contracts extending till 2020 that were signed in January 2009 the price of Russian gas shall be calculated by a formula that takes into account changes in the prices of fuel oil and gas oil in the previous nine months. The base price that has been chosen is 450 dollars for one thousand cubic meters of gas, which, in the opinion of an overwhelming majority of Ukrainian experts, greatly exceeds the price of Russian gas supplies to other European countries, although in the gas price for Ukraine no fee for transit is present.
On June 7 the prime ministers of the two countries met in Moscow to chair a session of the Russian-Ukrainian committee for economic cooperation. As the result, Vladimir Putin said that the price formula for gas for Ukraine was universal and applied to all other partners. He stressed the idea that the price formula for natural gas for Ukraine was precisely what it was for all in Europe: there are both gasoil and fuel oil.
“Ukraine has proposed changing the formula and including other components,” said Putin, adding that Russia would not change the price formula for either Poland or Europe, or other partners. “The gas oil the Ukrainian prime minister was talking about is pegged to the price of oil,” said Putin. “We cannot write down this formula, we do not write down this price, it varies in accordance with world oil prices and derivatives from it.”
According to the Russian prime minister, “the seller always wants to sell more expensive, but the buyer wants to buy cheaper.”
Meanwhile, Miller did not rule out that the price of Russian natural gas under long-term contracts in the 4th quarter of this year could reach 500 dollars per thousand cubic meters. According to him, the price formula for gas for Ukraine will remain a free market one and Gazprom would not peg it to the prices of other energy resources.
.Gazprom, Renova agree on merger of assets in electric power industry.
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MOSCOW, July 7 (Itar-Tass) —— Gazprom’s CEO Alexei Miller and the chairman of the board of directors of the Renova group of companies, Viktor Vekselberg, have signed an agreement of intent envisaging a merger of electric power generating assets, Gazprom’s information department has told Itar-Tass.
.Lithuanian investments in Baltic power plant lucrative – expert.
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VILNIUS, July 7 (Itar-Tass) — Lithuanian investments in the project to build a nuclear power plant in Russia’s exclave Kaliningrad region would be advantageous for Lithuania both economically and socially, financial analyst of the Lithuanian DnB Nord bank, Yekaterina Rojaka, said on Thursday.
Such high complexity facility as a modern nuclear power plant necessitates thousands of construction professionals of a highest level. There are such builders in Lithuania, she said.
The expert noted that over the recent time, exports of Lithuanian construction services have grown to former Soviet republics and partially to Poland.
“Other markets and other large-scale projects are practically closed for Lithuanian builders, and they fail to get access to these markets,” the expert said.
According to her, participation in the Baltic nuclear power plant project would also help slow down emigration flows and re-direct them to the region neighboring on Lithuania.
She also stressed that people who immigrate to Russia tend to return to Lithuania, which makes emigration to Russia more attractive from the point of view of the demographic situation. “People leaving for Russia to work there are more likely to return to Lithuania than those who emigrated to the United States, Germany or Austria.
.Trade turnover between Moscow, Bavaria reaches pre-crisis level.
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MOSCOW, July 7 (Itar-Tass) — Trade turnover between Moscow and Bavaria has reached the pre-crisis level and now it stands at 10 billion dollars, the head of the city’s department of foreign economic and international ties, Sergei Cheremin, said on Thursday.
“Moscow-Bavaria relations are 20 years old. During this time the two sides have inked 50 agreements, which are a reliable legal basis for cooperation. Bavarian enterprises eagerly open their offices in Moscow,” Cheremin said during the Days of the Bavarian Economy festival in Moscow, being held on July 5-8.
He recalled that one in two German enterprises doing business in Moscow was Bavarian.
“Muscovites very well know such brands as Adidas, Puma, BMW and Audi. All of these are Bavarian companies. They have created more than 25,000 jobs, and it is a great pleasure to say that we have completely restored the pre-crisis level of trade turnover. Now it totals more than 10 billion dollars,” Cheremin said.
Moscow will analyze Bavaria’s experience in upgrading healthcare, transport infrastructures, and modern anti-traffic jam systems.
“Bavaria is one of Germany’s leading hightech federal lands, and our traditional economics festivals in Moscow and Bavaria underscore the degree to which we need each other,” he said. “Whereas today we mainly ask our German counterparts to share experience, a number of joint products, including an intellectual transport system, may be used in Germany.”
He added that the hitech cooperation, a symbiosis of Russian and Bavarian companies, might produce remarkable innovative solutions, which may be in great demand not only in Russia and Germany, but also in third countries.
Cooperation between Moscow and Bavaria has lasted for decades. About 20 years have passed since the inking of the first agreement on partnership and cooperation.
Moscow and Bavarian authorities in April signed a memorandum on friendship and cooperation and they have plans for signing a full-fledged programme in this sphere in October.
.Putin sets task of establishing modern infrastructure of food market.
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MOSCOW, July 7 (Itar-Tass) —— Russian Prime Minister Vladimir Putin has set the task of forming a modern infrastructure of the food market.
At a meeting of the Cabinet devoted to the 2012-2014 budget policies Putin emphasized support for the domestic agri-industrial complex.
“Our priorities here are the commissioning of new processing facilities, creation of a modern infrastructure of the food market, support for all forms of agriculture, including farming and small and medium enterprises,” Putin said.
He stressed that in 2012 support for agriculture will be increased to 130 billion rubles.
.Index of consumer confidence in Russia firms 4pp in 2nd quarter.
(abbreviation for percentage points corrected in headline)
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MOSCOW, July 7 (Itar-Tass) — The index of consumer confidence in Russia, reflecting combined consumer expectations of population has risen by four percent in the second quarter of this year as against the first quarter, amounting to minus nine percent as compared with minus 13 percent, reports on Thursday Rosstat (Federal Service for State Statistics) by the results of a random research of consumer expectations of population in the second quarter of 2011.
The rise in the index level of consumer confidence was accompanied by positive changes in all its components. For instance the index of expected changes in the Russian economic situation for a short-term perspective stood at minus 0.2 percent and rose by 4.8 percentage points as against the first quarter of 2011.
The share of respondents, negatively assessing expected changes in the economic situation, totalled 20 percent. A total of 22 percent of the polled expected positive changes in the country’s economy during the next 12 months.
The index of changes, made in the Russian economy, rose to minus seven against minus 12 percent in the first quarter.
The share of respondents, negatively appraising changes, made in the economic situation, totalled 30 percent, while the share of positive assessments climbed by one percentage point, amounting to 21 percent.
The index of expected changes in the personal material position totalled minus three percent, which is by five percentage points higher than the level of the first quarter of 2011. The share of the polled, waiting for improvement of their material position within the next 12 months, remains at the previous level (13 percent).
Deterioration of their material standing is forecast by 16 percent of respondents as against 23 percent in the first quarter. A total of 58 percent of the polled reckon that their material position will not change during the year.
The index of changes, occurred in the personal material standing increased by four percentage points, totalling minus 10 percent as compared with minus 14 percent in the first quarter. The share of respondents, positively assessing changes in their material position within the year, amounted to 13 percent. Around 30 percent of the polled believe that their material position deteriorated.
The index of favourable conditions for major purchases stood at minus 23 percent, which is higher by five percentage points than the level in the first quarter. The index of favourable conditions for cash saving amounted to minus 39 percent and rose by four percentage points as compared with the first quarter.
A rise of the index of consumer confidence was registered in all age groups of population as against the first quarter: young people in the 16-29 age group by seven percentage points, the middle-age group (30-49 years) – by five percentage points and the age group of 50 and more – by three percentage points.
The index of expected changes in the Russian economic situation rose among young people from plus one to plus seven percent as compared with the previous quarter, people in the middle-age group – from minus seven percent to minus 0.5 percentage points and in the old age group – from minus six percent to minus five percent.
.RF, BRICS insist on ending reform of global monetary/financial system.
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MOSCOW, July 7 (Itar-Tass) — Foreign Minister Sergei Lavrov said Russia and its BRICS (Brazil, India, China and South Africa) partners insisted on bringing to an end the reform of the international monetary and financial system.
In an interview with Rossiya 24 Channel on Thursday, Lavrov said, “We will do our best to calm down the situation by taking part in the upcoming G-20 summit. Preparations for the summit have begun.”
“The situation in the country and the political crisis allow us to draw one more conclusion. The efforts taken by Russia and their BRICS partners to bring to an end the reform of the international monetary and financial system are indispensable as ever before,” the Russian minister said.
.Budget deficit in 2012 may be below the forecast one of 3 pct of GDP – Putin.
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MOSCOW, July 7 (Itar-Tass) —— The 2012 budget deficit may be below the projected one of 2.7 percent of the GDP, Prime Minister Vladimir Putin said at a meeting of the Cabinet on Thursday.
“We expect that next year the real deficit will be lower than the forecast one,” he said.
Putin said that “in 2012 revenues will total 10.6 trillion rubles, and expenses – 12.2 trillion, so the deficit is projected at 1.6 trillion rubles.” He also reminded that this year’s deficit had been originally set at 3.6 percent, but, in fact, it would amount to only about one percent of the GDP.
As he opened the Cabinet’s meeting, which focused on the main approaches to the budget for 2012-2014, Putin said that “this is the first truly post-crisis budget.”
“We have additional opportunities to address long-term, strategic objectives, and in this respect, the draft is a development budget, called to stimulate qualitative growth and modernization of the economy,” said the prime minister.
“At the same time this is a socially-oriented budget with a clear focus on improving the quality of life, the implementation of large-scale programs in demography, health, education and pensions,” said Putin.
However, he pointed out that the government “does not deviate from the principles of strict fiscal discipline.”
“The spending and revenues should be as balanced as possible and realistically planned, which, in turn, should serve as a basis for maintaining macroeconomic stability,” Putin said.
Gazprom, Renova agree on merger of assets in electric power industry.
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MOSCOW, July 7 (Itar-Tass) —— Gazprom’s CEO Alexei Miller and the chairman of the board of directors of the Renova group of companies, Viktor Vekselberg, have signed an agreement of intent envisaging a merger of electric power generating assets, Gazprom’s information department has told Itar-Tass.
The document confirms the intention of the parties to combine their electricity assets on the platform of Gazprom Energy Holding, with the conversion of the company into a an open joint stock entity and a possible subsequent IPO. According to the target capital structure, in a future combined company Gazprom will hold no more than 75 percent minus one share, and Renova – at least 25 percent plus one share.
It is planned that as a result of the merger the company will monitor the main power generating and retailing assets owned by the parties. The parties are going to determine the final list of assets and the amount of shares in the merged company, to prepare all the necessary legally binding documents and negotiate a deal with the Federal Antimonopoly Service.
However, the FAS head Igor Artemyev said today that the deal was undesirable from the standpoint of antitrust laws.
“I can tell you that this is not desirable,” said Artemyev. “Initially, our position will be very cautious,” he added.
.Draft budget to be finalized early September – Kudrin.
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MOSCOW, July 7 (Itar-Tass) —— In early September, the government will finally form the draft budget, Deputy Prime Minister, Finance Minister Alexei Kudrin told the media.
At Thursday’s Cabinet meeting the main budget parameters for 2012-2014 were adopted in principle.
“Now there begins the second phase of budget consideration within the government. Key parameters will be made known to each ministry. Each ministry by August 15 will present its proposals on all the tasks, activities, programs,” Kudrin said.
“By September 7 there will be held meetings of the budget commission and on September 7 the budget commission meeting, chaired by the prime minister, will sum up the results of budget discussions and all controversies,” he said.
Kudrin said that alongside this there was beginning the zero reading by State Duma factions. On Friday Deputy Finance Minister Tatyana Nesterenko is to meet with the faction of United Russia. Kudrin acknowledged that at this stage of budget work “differences remain on some problems,” but he expressed confidence that within two months they should be dealt with.
.Kudrin believes zero budget deficit by 2015 is realistic (adds).
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MOSCOW, July 7 (Itar-Tass) — Russian Finance Minister Alexei Kudrin believes it is realistic to cut the budget deficit to zero by 2015 on condition of having oil prices at the level of 100 dollars per barrel.
“Normal, stable work necessitates bringing the budget deficit to zero. This is a hard task if the price is 90 dollars, but if the price is 100 dollars, it will be not difficult to achieve a deficit-free budget,” Kudrin told reporters.
Kudrin explained that the year 2015 is taken as the point of reference because by this time Russia is expected to overcome the main consequences of the crisis. Under his forecasts “in 2015-2016 we will reach the pre-crisis level of budget revenues”. However as to the amount of GDP, Russia is expected to reach the parameters of the pre-crisis 2008 already by the end of the year.
“We expect that in 2011 GDP will make up 99.9 percent, in point of fact we will reach the pre-crisis level this year, and in 2012 GDP will be 3.4 percent more than parameters of 2008,” said Kudrin, who is also Deputy Prime Minister.
Besides, he believes the maximum admissible for Russia level of budget deficit is three percent of GDP. “Indeed, at the price of 93 dollars per barrel the deficit in 2012 will be under three percent of GDP, while the deficit over three percent will be a critical level, and risks for the economy will grow disproportionately,” the minister believes.
.Pension age rise in Russia possible, though rejected for now – Kudrin.
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MOSCOW, July 7 (Itar-Tass) —— A rise in the retirement age in Russia is possible, but for now it has been rejected, Deputy Prime Minister, Finance Minister Alexei Kudrin told the media after a meeting of the Cabinet on Thursday.
“For our country it is possible, but today the option has been rejected,” he said.
He speculated that the government would have to choose between an increase in the tax burden and a greater budget deficit for the sake of balancing the pension fund.
“Also, there is a possibility related to the emergence of a new president and a new government that will certainly evaluate these solutions again,” he added.
.Kudrin optimistic about Russia’s ability to get higher ratings.
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MOSCOW, July 7 (Itar-Tass) —— Russia’s Deputy Prime Minister, Finance Minister Alexei Kudrin is optimistic about the possibility Russia may be awarded higher ratings by international agencies.
“We are in a good zone. Russia has good prospects. Russia will be growing faster than the other countries,” Kudrin told the media. “There are no incurable problems in Russia, except for its dependence on oil.”
.Merger of energy assets of Gazprom, Renova to draw investors – Vekselberg.
7/7 Tass 378
MOSCOW, July 7 (Itar-Tass) —— The main purpose of the merger of electric power generating assets of Gazprom and Renova is the placement of a future company on international and Russian markets and the attraction of new investors, the chairman of the board of directors of the Renova group of companies, Viktor Vekselberg said on the Rossiya-24 round-the-clock news channel after the signing of an agreement of intent envisaging creation of a common pool of the companies’ electricity assets.
Vekselberg voiced the hope that “there will emerge a new attractive blue chip that will prove of great interest to both Russian and foreign investors.”
Gazprom CEO Alexei Miller, too, believes that a company operating in the electric power industry, in the first place, in cities with populations over one million, would help enhance the reliability and stability of electricity supply to Russian consumers.
Miller and Vekselberg signed an agreement of intent envisaging a merger of electric power generating assets on the platform of Gazprom Energy Holding, with the conversion of the company into an open joint stock entity and a possible subsequent IPO. According to the target capital structure, in a future combined company Gazprom will hold no more than 75 percent minus one share, and Renova – at least 25 percent plus one share.
It is planned that as a result of the merger the company will monitor the main power generating and retail assets owned by the parties.
.Baltic NPP might enhance Lithuania’s energy independence – Rosatom.
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VILNIUS, July 7 (Itar-Tass) —— Participation in the project for building a Baltic nuclear power plant in Russia’s westernmost exclave region of Kaliningrad would enhance the energy independence of Lithuania, the spokesman for the Russian state nuclear power corporation Rosatom, Sergei Novikov, said on Thursday.
“Participation in the construction of the Baltic nuclear power plant would guarantee Lithuania uninterrupted power supply and seriously strengthen energy independence,” he said.
Novikov recalled that the possibility of purchasing electricity from a future nuclear power plant in the Kaliningrad Region was of interest to Poland, Sweden, Germany, Estonia and Latvia. The corporation’s representative expressed the hope that Lithuania might join in, for it was forced to import up to 50 percent of the required electricity from neighbors, including Russia. “Rosatom once again confirms our interest in having Lithuania, along with other countries, involved in the project for a Baltic nuclear power plant, and it is ready to share all the necessary information with the Lithuanian investors,” said Novikov.
The official position of Vilnius on the subject is not known yet.
“We have not received any official response to the invitation to join the project,” said the Rosatom spokesman.
Lithuanian companies, according to media reports, are actively interested in opportunities to participate in it, especially in the infrastructure development of the Baltic NPP.
.Record high number of Hyundai Solaris cars sold on Russian market.
7/7 Tass 447
ST. PETERSBURG, July 7 (Itar-Tass) — A record high number of Hyundai Solaris cars have been sold on the Russian market, the press service of Hyundai Motor CIS told Itar-Tass on Thursday.
It said over 10,800 vehicles of that model were sold in Russia in June. It is not for the first time that Hyundai Solaris has been the leader among cars of foreign brands sold in Russia. Company officials stress that owing to sensational sales of that model, Hyundai Motor CIS increased the amount of car sales twofold in the first half of this year, selling over 67,000 cars. “This is one of the highest figures on the Russian market,” a source from the company press service said.
Hyundai began the construction of a plant near St. Petersburg in June 2008. The amount of planned investments is 500 million euros. Batch production of Hyundai Solaris sedan, designed specially for the Russian market, began this year. Production of its hatchback modification began in May.
It is planned that from August 15 the plant will begin working in three shifts, and Kia Rio, designed specially for the Russian market, will be also produced at the plant in St. Petersburg. Kia expects to produce 20,000 Kia Rio vehicles by the end of this year.
Under the plans of Hyundai Motor Manufacturing Rus, the capacities of the plant in St. Petersburg will grow to 200,000 vehicles against the earlier stated figure of 150,000.
.Russian companies may borrow over $ 40 bln on int’l marts by end-2013.
7/7 Tass 493
LONDON, July 7 (Itar-Tass) – Russian companies may borrow up to $ 40 billion on the international markets through to the end of 2013 by floating their securities, Steve Kale, the Citigroup Director for the European Capital Equity Markets, said Thursday.
The data available to Citigroup suggests that the issuers of Russian securities have borrowed about $ 10 billion since the beginning of the year.
The latter figure includes the sale of a 10% stake in the VTB bank that was held by the Russian government, as well as Initial Public Offerings by the corporation Rusagro, which produces sugar and pork, and by the building industry company Etalon.
Russian issuers will most likely be able to draw another $ 11 billion on the markets before the yearend.
A half of that amount may be brought in by the sale of the Russian government’s stake in the Savings Bank /Sberbank/, Kale said.
The monies borrowed in 2012 and 2013 may total another $ 30 billion.
It is widely believed that Moscow’s plans to privatize more than a thousand companies will facilitate the attaining of this objective.
.Putin calls for special attention to building new tunnel in St Pete.
7/7 Tass 497
St PETERSBURG, July 7 (Itar-Tass) – Russian Prime Minister Vladimir Putin on Thursday called for giving special attention to a timely completion of the Orlovsky tunnel project in St Petersburg.
The project of a new automobile tunnel to be built under the river Neva was presented to Ptuin by the executives of companies taking part in it.
The tunnel is supposed to connect the Smolnaya and Sverdlovskaya embankments with the central part of the city, thus providing for permanent automobile communications between the parts of the city located on the northern and southern banks of the Neva.
This will hopefully scale down the burden on the existing crossings and transport arteries and will help increase the raising times for the city’s numerous drawbridges. In its turn, the measure will help increase the throughput capacity of the Volga-Baltic Sea inland waterway system.
St Petersburg Governor Valentina Matviyenko said during the presentation that the need for a tunnel of this kind is growing all the time given the intensify of automobile traffic in the city, since the period of navigation on the Volga-Baltic Sea waterway system creates big traffic problems for St Petersburg.
An agreement on purchasing a unique tunnel-boring jumbo was signed with a German company two days ago.
The jumbo will have a diameter of 19 meters. It will be built in 2012 and commissioned for operations at the beginning of 2013.
.Putin calls for special attention to building new tunnel in St Pete.
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8/7 Tass 499a
St PETERSBURG, July 8 (Itar-Tass) – Russian Prime Minister Vladimir Putin on Thursday called for giving special attention to a timely completion of the Orlovsky tunnel project in St Petersburg.
The project of a new automobile tunnel to be built under the river Neva was presented to Putin by the executives of companies taking part in it.
The tunnel is supposed to connect the Smolnaya and Sverdlovskaya embankments with the central part of the city, thus providing for permanent automobile communications between the parts of the city located on the northern and southern banks of the Neva.
This will hopefully scale down the burden on the existing crossings and transport arteries and will help increase the raising times for the city’s numerous drawbridges. In its turn, the measure will help increase the throughput capacity of the Volga-Baltic Sea inland waterway system.
St Petersburg Governor Valentina Matviyenko said during the presentation that the need for a tunnel of this kind is growing all the time given the intensify of automobile traffic in the city, since the period of navigation on the Volga-Baltic Sea waterway system creates big traffic problems for St Petersburg.
An agreement on purchasing a unique tunnel-boring jumbo was signed with a German company two days ago.
The jumbo will have a diameter of 19 meters. It will be built in 2012 and commissioned for operations at the beginning of 2013, said executives of the Herrenknecht AG, the manufacturer company.
The installation will remain in Russia after the completion of the tunnel for performing other projects.
The company’s President, Martin Herrenknecht, presented a model of the jumbo to Putin.
“That’s a really momentous and very much needed project but it’s rather expensive, too – it’ll cost around $ 2 billion,” Putin said, adding that the works will be financed on a parity basis by the federal government, the city authorities and private investors.
“The monies provided by the federal government will account for one-third of the total,” he said. “We do hope the contractors will display efficiency and the tunnel will be commissioned for operations on time.”
.Crisis-hit Belarus eyes Azerbaijani market, investments.
8/7 Tass 454
BAKU, July 8 (Itar-Tass) —— Crisis-hit Belarus is working to expand the sales of its products on the Azerbaijani market and attract local investments into its national economy.
On Thursday a memorandum was signed in the presence of visiting Belarussian Prime Minister Mikhail Myasnikovich between the Ganja Car Plant and Minsk truck works (MAZ) to produce garbage-collecting vehicles using MAZ trucks and German Haller’s equipment.
The Minsk tire plant also signed a cooperation agreement with Ganja works.
Belarus also plans to supply BelAZ earthmovers and launch energy-saving lighting equipment production in Azerbaijan.
On Friday Myasnikovich will discuss the projects with Azerbaijani Prime Minister Artur Rasi-zade and then with President Ilkham Aliyev.
Belarussian Ambassador to Azerbaijan Nikolai Patskevich said Minsk is also eyeing Azeri investments and said 400 enterprises, including two oil refineries in Plotsk and Mozyr (total annual capacity of 22 million tons) will be privatized in 2011-2013.
Myasnikovich said Azerbaijan might also acquire one of Belarussian banks.
.Putin to discuss petrol supplies.
8/7 Tass 444
MOSCOW, July 8 (Itar-Tass) —— Prime Minister Vladimir Putin will visit the oil refinery in Kirishi near St. Petersburg on Friday to discuss the situation on the domestic petrol market following price hikes and shortages of the fuel in some regions of the country.
The government press service said Putin will “discuss the current situation in the industry and modernization prospects of petrochemical facilities, in particular, increased refining capacities, higher oil conversion ratio, uninterrupted supply of fuel to the domestic Russian market and the necessary changes in customs, tariff, and tax policies.”
Deputy Prime Minister Igor Sechin in charge of the fuel and energy complex will accompany Putin.
.Kudrin in London to prepare Cameron’s visit, discuss IFC.
8/7 Tass 15
LONDOIN, July 8 (Itar-Tass) —— Russian Deputy Prime Minister and Finance Minister Alexei Kudrin will on Friday discuss preparations for the visit of British Prime Minister David Cameron to Russia this year as well as plans to develop Moscow into an international financial center.
Kudrin, who co-chairs the bilateral committee on trade and investments, will meet British co-chair and Business Secretary Vince Cable to discuss plans for the visit of Cameron to Russia later this year, an official of the UK Department for Business told Tass.
Kudrin will then meet Michael Bear, the Lord Mayor of the City of London, to discuss prospects for the creation of the international financial center in Moscow. Bear co-chairs the Russian-British group on the IFC in Moscow. The Russian co-chair is Alexander Voloshin.
Kudrin is also scheduled to have a private meeting with his British counterpart Chancellor George Osborne.
.Medvedev presents law on Belarus export oil duties outside CU.
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MOSCOW, July 8 (Itar-Tass) — Russia’ s President Dmitry Medvedev has presented for further ratification by the State Duma a law on payment and calculation of export duties when oil and oil products are exported from the territory of Belarus outside the customs territory of the Customs Union.
The law was signed in Moscow on December 9, 2010, the Kremlin’s press service reported on Friday.
Medvedev appointed Secretary of State, Deputy Finance Minister Sergei Shatalov his official representative during the ratification procedures in the two chambers of the Federal Assembly.
.High-technology air enterprise to be set up in Karachai-Cherkessia.
8/7 Tass 73
CHERKESSK, July 8 (Itar-Tass) — It is planned to create a high-technology aircraft industry enterprise and a modern technology park the Karachai-Cherkessia Republic. The regional press service told Itar-Tass that “head of Karachai-Cherkessia Rashid Temrezov approved the proposal of the Interavia design bureau on the creation of the technology park, the decision has been made to sign an agreement between the republic’s authorities and the leadership of the company for the implementation of the project.”
According to Interavia, the company intends to register here an aircraft industry group based on the federal and private property. It is planned to organise serial production of aircraft equipment for fulfilling the national economy tasks and provide the full maintenance service cycle. The company also plans to create the research and production and flight facilities, including an airfield, which would ensure flight tests and operation of the equipment. The republic also needs a centre for training of engineers, technicians and pilots based on methods developed at flight academies of the Russian Federation and at the Moscow Institute of Aviation.
“This programme will help organise a prestigious high-yield aircraft production, to create 450 jobs in manufacturing and a significant number – at the sites of operation of the manufactured equipment,” the press-service noted.
.Medvedev presents law on Belarus export oil duties outside CU.
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MOSCOW, July 8 (Itar-Tass) — Russia’s President Dmitry Medvedev has presented for further ratification by the State Duma a law on payment and calculation of export duties when oil and oil products are exported from the territory of Belarus outside the customs territory of the Customs Union.
The law was signed in Moscow on December 9, 2010, the Kremlin’s press service reported on Friday.
Medvedev appointed Secretary of State, Deputy Finance Minister Sergei Shatalov his official representative during the ratification procedures in the two chambers of the Federal Assembly.
In December, Russia’s Minister of Economic Development Elvira Nabiullina said that Russia and Belarus had agreed to nil oil duties, but to charge ten percent of export duties on oil products.
Experts forecast that the new methods of charging duties will benefit about 3.9 billion dollars to Belarus’ budget.
“As for Russia, we shall not have an immediate effect: we would rather have an effect of bigger sale of the products,” the minister said. “Russia’s economy will gain in mid-term more that it may lose in short-term.”
The Belarussian parliament ratified the agreement on December 21.
The agreement does not cover oil produced in the territory of Belarus and oil products produced from third countries’ raw materials and those for re-export.
The duties will be equal to those in the Russian Federation on the day the customs of the Republic of Belarus register a declaration on imported goods. At the same time, Belarus will have a right to charge additional payments to its budget above the export duty payable to the Russian budget.
.Voloshin is reappointed head of group on int’l financial centre.
8/7 Tass 113
MOSCOW, July 8 (Itar-Tass) —— Russia’s President Dmitry Medvedev renewed team of the working group on organization of the international financial centre in the Russian Federation, supervised by the presidential council on development of financial market, the Kremlins press service said on Friday.
Uralkali’s Chairman of the Board of Directors Alexander Voloshin was reappointed the group’s leader.
The group will feature federal and Moscow officials, representatives of legislative authorities, financial experts, businessmen and scientists.
.Ukrainian president o’keys export of Ukrainian gas to Poland.
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KIEV, July 8 (Itar-Tass) —— Ukrainian President Viktor Yanukovich has endorsed a law regulating the domestic natural gas market, thus authorizing export of Ukrainian gas to Poland, the presidential press service reported on Friday.
On June 17, Ukraine’s parliament supplemented the law with a provision authorizing the country’s gas monopolist Naftogaz Ukrainy and its subsidiaries to export domestically produced gas in a volume fixed by the Ministry of Energy and Coal Industry.
In October 2004, Naftogaz and Poland’s PGNiG state-run oil and gas company signed a contract on the construction of a medium-pressure gas pipeline between Ukraine’s Ustilug and Poland’s Hrubieszow that will supply gas to Poland’s south eastern provinces. The construction of the pipeline was completed in September 2005.
On October 24, 2004, the two companies signe