Budget constraints mean cutting state support for corporate lending, this area must be prioritized - Reshetnikov
VSEVOLOZHSK. April 17 (Interfax) - The government will continue to support lending to businesses, but budget constraints do not allow the same support to be provided as during COVID, and it will be reoriented from lending support to capital support, Russian Economy Development Minister Maxim Reshetnikov said on Friday in his speech at My Business, a nationwide business support infrastructure forum in Vsevolozhsk.
"Without a doubt, we will continue to implement all the state support measures that there are. Another issue is that the situation, including the budget situation, which we have come up against, obviously does not assume the same volume of subsidization for lending programs or the grants that we give out, and so on, as during COVID," the minister said.
"Of course, we will never abandon the obligations that we have taken on, servicing the loan principal that we have. We truly will do all of this; but, of course, new loan issues will be much more modest in size. And our task here is to prioritize it in the right way, maybe even not putting some of it in the hands of banks," Reshetnikov said.
"Because our approach now is as such: we are giving limits to banks, giving them a broad enough list of areas, and banks then internally sort of find their own clients. But in general, we have to think about how far this is correct given that the overall volume is decreasing. We probably need to take a tougher approach to setting out priorities," he said.
"Of all the programs that there are, of course, this is an issue of umbrella guarantees. This is where we are indeed branching out. Although, I must say, we can see from the volume of umbrella guarantee payments that are being presented to us that the situation here is not an easy one either. The structure of the portfolio and risks are being realized to a much greater extent. This is a predictable situation overall. Obviously, any deterioration in the situation, any complication in the economy, will always affect the quality of the loan portfolio. That is why we have introduced umbrella guarantees, in order to support lending and share losses with banks when the situation worsens. Therefore, we are prepared for this, on the whole. And going forward, we will work on the basis that umbrella guarantees are an effective mechanism," the minister said.
"But on the whole, of course, the direction we are going in is to move away from lending support for businesses - in other words, moving away from subsidizing interest rates - towards capital support in various forms. And those very umbrella guarantees also count as support right now; our support is currently in the lending department, since we are sharing these problems with businesses. Therefore, the objective of microfinance organizations and regional guarantee institutions is one which is probably closer to supporting business capital," Reshetnikov said, commenting on the plans to transition to a new type of support for businesses.
"And for our part, we will develop programs for businesses which have, let's say, already grown, for them to conduct IPOs in different forms - IPOs, SPOs, crowdfunding platforms. We have gathered a certain amount of experience in this and now is probably the best time to replicate this experience," the minister said.
"This set of key areas is what is on our agenda right now. We are not abandoning individual support programs for border regions and new regions. We have special programs there, but we will move on with those, too," he said.
Reshetnikov also said that "Small Business" was not just an end-to-end project to support small businesses, but also included quite a few industry-specific programs and projects. "It is the same project for tourism, the federal one, which is administered by the Economy Development Ministry. We can see that there is a large volume of support for small businesses, and it is very important for us to combine and for you to understand and see all the programs that are available. The Russian Small and Medium Business Corporation (SME Corporation) has already done a lot of work on this and we have a digital platform which acts as a kind of internal engine, does the scoring work, sees an entrepreneur's profile, and sees who is receiving the support. It is therefore very important that you use these data and see all of the programs that are being implemented; all the programs have been created in order to understand what kind of business you have on your territory, who is receiving support, who perhaps is not receiving support, but also to fine-tune regional measures in a competent manner," Reshetnikov said.
"I want to motivate everyone to work very closely under these new conditions. The conditions truly will be tougher and there will be tangibly less funds. We will have to go through this structural transformation together. We will have to optimize in some areas, feel around and learn to work with new niches, without forgetting aspects such as product exports. But this will not be a very easy time, and will require us to look for new technologies, implement new technologies, new competencies and constant and maintain very close interactions with businesses and support for businesses at all stages. This will not always be financial support, but it is all the more important to break down administrative barriers, facilitate that same interaction and get fairer treatment from larger structures," Reshetnikov said, commenting on the tasks faced by regional authorities.
