Russia may end up year with 0.3% budget surplus

Russia may end the year with a budget surplus of 0.3% GDP due to higher revenues and spending cuts, a deputy finance minister said on Tuesday.

“Under the budget plan, we have 0 but in reality it will be 0.3 [% GDP],” Tatiana Nesterenko said.

She said extra budget revenues would be 78-80 billion rubles ($2.5 billion) and spending cuts would bring another 50-60 billion rubles ($1.6-2 billion).

 

Russia, Kazakhstan may cancel oil export duties within CIS free trade zone

Ukrainian Prime Minister Mykola Azarov has said Russia and Kazakhstan have agreed to cancel oil export duties for participants in a free trade zone being created within the Commonwealth of Independent States (CIS).

“For the first time, we fixed in the agreement the readiness of Russia, as well as Kazakhstan, another oil producing country, to cancel [oil] export duties within a limited period,” Azarov said in an interview with Ukraine’s Inter TV channel on Saturday.

Russian Deputy Finance Minister Sergei Shatalov said on Thursday Russia could cancel its oil export duties no earlier than 2020.

On Tuesday, the majority of the CIS countries signed an agreement to set up a free trade regime after two decades of debate. The CIS consists of Azerbaijan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan and Uzbekistan. Ukraine has not ratified the CIS Charter but participates in its activities. Turkmenisan, Azerbaijan and Uzbekistan are yet to decide whether to join the agreement.

Azarov said on Thursday the agreement may come into force in January 2012. It is yet to be ratified by member states.

In the interview with Inter, the Ukrainian premier said Russia’s high oil export duties were detrimental to Ukraine’s oil refineries.

“Oil export duties of $450 per ton ($64 per barrel) make our oil refineries unprofitable,” he said.

He also said he expected a new agreement on Russian gas supplies to Ukraine being negotiated by the sides to correspond to Ukraine’s “long-term interests.”

“We are certainly ready to compromise – and we will – because we don’t have other options,” he said.

In August, following a gas pricing row between Moscow and Kiev, Ukrainian state energy monopoly Naftogaz threatened to cut its gas imports from Russia if Moscow does not agree to lower the price.

Earlier this month, Former Ukrainian Prime Minister Yulia Tymoshenko was sentenced to seven years in jail on charges of abusing her power in the signing of a 2009 gas deal with Russia that Ukraine seeks to review. She has already appealed the verdict.

“The first thing that Russia needs is guarantees of uninterrupted gas supplies to Europe,” Azarov said. “We are trying to persuade our partners that we are ready to guarantee the reliability and stability of gas supplies by concluding the agreement.”

Russia annually pumps about 100 billion cubic meters of gas to European countries via Ukraine, which makes up 80 percent of its total gas supplies to Europe.

Russian gas exports to Europe via Ukraine have been disrupted several times in recent years over pricing rows with Kiev. In early 2009, Europe has been left without Russian gas for nearly two weeks after Russian energy giant Gazprom and Ukrainian state energy monopoly Naftogaz failed to agree on gas prices.

Terms of Russia’s WTO accession agreed – Foreign Minister

Russia has agreed all the terms to join the World Trade Organization, Russian Foreign Minister Sergei Lavrov said on Friday.

“Now I can say all the issues related to Russia’s bid to join the WTO have been settled, the issues related to the standards and the regulations of the WTO,” Lavrov said.

Georgia’s opposition to Moscow’s WTO accession is not an obstacle, he said. Moscow supports the so-called Swiss offer to reach a bilateral agreement between Russia and Georgia. “We have proposed several options to resolve the issue and stay within WTO statutes.”

Russian Deputy Finance Minister Andrei Slepnev has said that Russia expected to join the WTO in December 2011. The EU and World Bank hope Russia joins the WTO at a ministry meeting on December 15-17 in Geneva.

Russia has been in membership talks with the 153-nation WTO for 17 years and remains the only major economy still outside the organization.

 

Russia against individual support for troubled European economies

There is no need for individually-tailored assistance to debt-hit European states since collective support is more efficient, Russian Deputy Finance Minister Sergei Storchak said on Friday.

Storchak’s statement comes after Russian Presidential Aide Arkady Dvorkovich said on Monday that Moscow may buy Spanish debt securities to assist in solving the European debt problem.

“We stand for collective support measures,’ Storchak said after a G20 finance ministers meeting. “The purchase of the Spanish bonds by Russia is like a love pat. We can not place the huge assets in our portfolio.”

 

He also said that Russia’s support of the troubled European countries can not be regarded as “charity” since these actions are aimed at stabilizing the Russian economy.

 

“It is the job for our own economy to ease the life of Russian companies and households, to stop this volatility, to stop this unpredictable capital inflows and their influence on the currency exchange rate,” Storchak added.

 

Main news of October 14

WORLD

A deal between Israel and Hamas on the exchange of over 1,000 jailed Palestinians for Israeli soldier Gilad Shalit will begin on Tuesday, a spokesman for the militant group Committees of People’s Resistance that was involved in Shalit’s seizure along with Hamas said

* There is no need for individually-tailored assistance to debt-hit European states since collective support is more efficient, Russian Deputy Finance Minister Sergei Storchak said

* British Defense Secretary Liam Fox resigned, following a scandal with his close friend, Adam Werritty, who was involved in ministerial affairs despite having no official government role, the Defense Ministry said in a statement

* Mykola Melnychenko, a former security officer who claims to have secretly recorded conversations that implicate Ukrainian ex-president Leonid Kuchma in the murder of an opposition journalist, is currently in the United States, his lawyers said

* Italian Prime Minister Silvio Berlusconi won a confidence vote, the 51st since he took office in 2008.

* The Ukrainian Security Services (SBU) resumed questioning former Ukrainian Prime Minister Yulia Tymoshenko on Friday in a new criminal investigation in which she is accused of attempting to embezzle $405 million, prosecutor’s office spokesperson Yury Boichenko said

RUSSIA

* There is no need for Prime Minister Vladimir Putin to participate in primaries to be nominated for president, his spokesman said

* St. Petersburg’s Severnaya Verf shipyard will deliver a new stealth corvette to the Russian Navy at an official ceremony

BUSINESS

* European Central Bank Executive Board member Juergen Stark said he considered it necessary to establish a European budget office as part of the euro zone Finance Ministry, the establishment of which was first proposed by ECB President Jean- Claude Trichet

* Software giant Microsoft has bought Internet communications company Skype for $8.5 billion in its largest ever acquisition deal, Microsoft said

* Fitch international rating agency downgraded Swiss bank UBS AG over lower government support and put seven large U.S. and European banks on credit watch negative, the agency said

Main news of October 3

WORLD

* NATO will soon complete its Libyan operation Unified Protector, the alliance’s Secretary General Anders Fogh Rasmussen said

* Britain denied it had imposed an entry ban on at least 60 Russian officials implicated in the death of Moscow lawyer Sergei Magnitsky

* Russia condemns “terrorist” acts against Syrian civilians and urges the opposition to abandon the tactics of violence and open negotiations with the authorities, the Russian Foreign Ministry sai

* A scientist awarded the Nobel Prize in medicine for his discoveries about the immune system died on September 30

RUSSIA

* Moscow again denied any involvement in the murder of Alexander Litvinenko and challenged Britain to present any evidence to the contrary

* Russia’s ruling United Russia party denied accusations of violating electoral laws in the ongoing parliamentary election campaign

* The Russian Communist Party proposed that ethnicity be once again indicated in the passports of Russian citizens

BUSINESS

* The Russian government will closely follow developments at the European offices of gas export monopoly Gazprom, which were searched last week by the European Union, Prime Minister Vladimir Putin sai

* Gazprom is ready to supply gas to private Turkish companies if Turkey’s state gas pipeline operator Botas terminates its gas supply contract with the Russian gas exporter, Gazprom’s export head Alexander Medvedev said

* Belarus is seeking a $400 million loan from Iran and hopes to agree a new $7 billion bailout from the International Monetary Fund, Deputy Finance Minister Vladimir Amarin said

* Kazakhstan will introduce tax breaks and subsidies for major foreign investors, the industry minister of the energy-rich Asian country said

Siluanov replaces Kudrin in IMF and World Bank roles

Russia’s acting Finance Minister Anton Siluanov will replace long-standing minister Alexei Kudrin, who was sacked on Monday, as head of the Anti-crisis Fund in the regional Eurasian Economic Community (EurAsEC) and governor for the country in the International Monetary Fund and the World Bank, Deputy Finance Minister Sergei Storchak said on Thursday.

“As far as the EurAsEc’s Anti-crisis Fund is concerned, we are preparing documents for Anton Germanovich (Siluanov), and we will do the same for the positions of governors for the Russian Federation in the IMF and the World Bank,” Storchak told journalists.

Kudrin will however retain the posts of the head of the National Banking Council and head of the Council for Financial Markets, he added. Presidential aide Arkady Dvorkovich said Kudrin would retain the posts at least until a new minister was appointed.

Storchak said that Kudrin would continue working on the creation of an international financial center in Moscow, one of President Dmitry Medvedev’s most cherished projects.

Kudrin was sacked following a dispute with Medvedev, citing disagreement with the president on economic policies, in particular, on rising defense expenditure.

Foreign investors regarded Kudrin as the person most likely to carry out far-reaching economic reforms in the next government, with Western economists unanimously seeing his departure as negative for the Russian economy. 

Kudrin has retained the posts of chairman of the National Banking Council and the Presidential Council for Financial Markets, Deputy Finance Minister Sergei Storchak said on Thursday.

The former finance minister will also be responsible for Moscow’s projected International Financial Center. “This remains within his responsibility,” Storchak added.

 

Profile: Anton Siluanov

Anton Siluanov was born April 12, 1963 in Moscow. First employed by the Russian Finance Ministry in August 1985, Siluanov was named acting finance minister in September 2011, replacing the outgoing Alexei Kudrin.

In 1985, Anton Siluanov graduated from the Moscow Finance Institute, specializing in Finance and Credit. Upon graduation he joined the finance ministry of the Russian Federal Socialist Republic, working initially as an economist and then a senior economist.

Between March 1987 and May 1989, Siluanov completed military service in the Soviet Army. He then returned to the Russian finance ministry, serving in roles from lead economist to consultant and deputy department head up until February 1992.

Siluanov continued his rise in the Finance Ministry throughout the 1990s and was deputy director of the Budget Management Division from 1992 to 1997.

In the late 1990s he was appointed director of the Macroeconomic Policy and Banking Department of the Finance Ministry, serving in this position from October 1997 to July 2003. In March 2001, he was also made a member of the board of the Finance Ministry.

Siluanov’s first tenure as deputy finance minister was between July 2003 and May 2004. He then served as director of the Inter-Budget Relations Department for six months, before being reappointed deputy finance minister in December 2005.

Following Alexei Kudrin’s resignation in late September 2011, Siluanov was appointed acting finance minister on September 27, 2011.

Putin Announces Acting Finance Minister

Russian Prime Minister Vladimir Putin has named Deputy Finance Minister Anton Siluanov as acting finance minister, replacing Aleksey Kudrin, who was ousted a day earlier.

Putin also said that First Deputy Prime Minister Igor Shuvalov would take over Kudrin’s duties as deputy prime minister, overseeing financial issues in the government.

Putin told a cabinet meeting that “both these [decisions] have naturally been agreed with President Dmitry Medvedev. It is our joint decision.”

Kudrin rebelled after a weekend party congress at which former two-term president Putin and Medvedev announced their plans effectively to swap posts over the course of parliamentary elections in December and a presidential election in March.

The move by Putin, who is generally regarded as Russia’s most powerful politician, could leave him unrivaled atop Russian politics for two six-year terms. He left the presidency in 2008 because of a constitutional limit of two consecutive terms.

compiled from agency reports

Possible candidates for Russia’s finance minister position

President Dmitry Medvedev fired Finance Minister Alexei Kudrin on Monday for his comments that he did not want to work in a future government headed by Medvedev after March presidential elections.

Among the possible candidates to replace Kudrin are:

TATYANA GOLIKOVA,  Health and Social Development Minister, formerly First Deputy Finance Minister.

Golikova, 45, has been working in the Finance Ministry since 1990 and in her later years there was responsible for the budget. She became Health and Social Development Minister in 2007 and started to reform welfare and medical systems, causing a barrage of criticism from medical professionals.

However, she always enjoyed government support.

SERGEI IGNATYEV, head of the central bank, formerly First Deputy Finance Minister.

Ignatyev, 63, had been working intermittently at the Finance Ministry since 1992. He is one of post-Soviet reformers who came to power together with Yegor Gaidar, the architect of Russia’s initial post-Soviet era reforms, after the collapse of the Soviet Union.

In 2002, he became head of the central bank which has recently been strongly criticized for its failures in banking supervision after the collapse of International Industrial Bank, one of Russia’s largest banks, in 2010 and severe problems discovered this year in the country’s fifth largest bank, Bank of Moscow.

MIKHAIL ZADORNOV, head of VTB-24 retail bank and former Finance Minister.

Zadornov, 48, was one of the team of Grigory Yavlinsky who set up liberal Yabloko party. Zadornov was a State Duma lower house deputy in 1994-1997 and headed the budget and finance committee there. In 1997 he became  finance minister and was virtually the only government official who kept his post after the 1998 economic crisis.

In 2000-2005, he returned to parliament after which he became head of the retail arm of state-run VTB bank.

SERGEI SHATALOV, Deputy Finance Minister in charge of taxes

Shatalov, 61, has been working in the Finance Ministry since 1995. He is the author of the country’s tax reform, which in 1998 was voted down by the then communist-dominated Duma. Shatalov then resigned from the ministry and joined one of the then Big Six auditing companies. He returned to the Finance Ministry in 2000, when parliament became less recalcitrant and implemented his tax reform plan.

ARKADY DVORKOVICH, Medvedev’s key economic aide and one of his most influential advisers, has earlier in September called for a government reshuffle this year or no later than when a new government was formed after the March polls.

Dvorkovich, 39, who was educated in Moscow and the U. S., has said he was strongly opposed to a proposal to raise taxes by Kudrin, a close ally to Prime Minister Vladimir Putin, because it would hurt business and economic activity. After Kudrin’s resignation, Dvorkovich cited Kudrin as one of his teachers.

Dvorkovich used to work with the Economic Expert Group at the end of the 1990s helping the Finance Ministry with macroeconomic research. In 2001-2004, he was Deputy Economic Development and Trade Minister. In 2004-2008, Dvorkovich headed the expert department of the presidential administration and became Medvedev’s aide after his election four years ago.

SERGEI ALEKSASHENKO, director for macroeconomic research at the Higher School of Economics, formerly Deputy Finance Minister and first central bank chairman

Aleksashenko, a 52-year old liberal, was Deputy Finance Minister in 1993-1995 and first deputy central bank chairman in 1995-1998. He quit the central bank after the 1998 economic crisis to do some scientific work and head Russian and foreign companies. He is an ardent critic of Russia’s economic and political authorities.

Russia ready to spend reserve funds on EFSF bonds

Russia is ready to invest money from its Reserve Fund and National Wealth Fund in European Financial Stability Facility (EFSF) bonds, Deputy Finance Minister Sergei Storchak said on Friday.

“Of course, we will do it and the minister’s view is that we will use this instrument,” Storchak told reporters, adding that the instrument should be developed with the help of the Europeans.

The European Union formed the EFSF in May 2010 to support to economically weak members such as Ireland and Greece. The fund now amounts to 750 billion euros, including 440 billion euros under EU states’ guarantees.

The EFSF planned to float bonds worth 16 billion euros this year. Fitch Ratings agency has assigned an AAA rating to the fund’s bond program.

“(The bonds) should get on to their feet and become an institution. It is not just a piggy bank, it is a serious institution, a borrower on its own, whose paper must be rated AAA,” Storchak said. “This institution must get on to its feet in investment programs not only in Russia but also in hedge and pension funds.”

The process was long and he did not see the necessity to speed it up, he said.

Russian government approves 2012-14 draft budget

The Russian cabinet on Wednesday approved a draft federal budget for 2012-14, Deputy Finance Minister Tatyana Nesterenko said.

The 2012 budget deficit will be 869.2 billion rubles, or 1.5% of GDP, 1.6% in 2013 and then down to 0.7% in 2014.

Federal budget revenues in 2012 are projected at 11.789 trillion rubles and expenditures at 12.658 trillion.

The 2013 figures are 12.715 trillion and 13.720 trillion and the 2014 figures 14.101 trillion and 14.580 trillion rubles, respectively.

The deficit will be covered mainly by state debt and privatization receipts.