Moscow press review for March 21, 2016
MOSCOW. March 21 (Interfax) - The following is a digest of Moscow newspapers published on March 21. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
Russia's Central Bank decided on Friday to leave its key interest rate unchanged at 11%, where it has been since August 2015, although inflation is slowing faster than expected. It warned that the period of moderately tight monetary policy might last longer than expected, as the uncertainty of fiscal policy is creating new risks of higher inflation (Vedomosti, p. 1).
The new pension reform proposed by the Finance Ministry goes beyond just revising rates for contributions to off-budget funds. It proposes declaring social levies to be taxes or at least a unified payment, handing their collection to the Tax Service and spending to the Labor Ministry, and eliminating most discounts. Lack of coherence costs the current system up to 10% of collected funds, while consolidation is expected to boost revenue by as much as 400 billion rubles annually (Kommersant, p. 1).
As U.S. President Barack Obama began his historic visit to Cuba on Sunday, the Russian authorities said the reboot of U.S.-Cuban relations will in no way hurt Moscow's relationship with Havana. Russia's ambassador to Cuba said Havana is not changing its positions, values or priorities in the international arena, or its circle of strategic partners (Kommersant, p. 1).
The Russian Central Bank's revised three-year forecast assumes the current oil situation will continue and the economy will emerge from recession by the end of 2016, while confidently projecting GDP growth only in 2018. ACRA rating agency, however, expects GDP to contract by 0.4% in 2017 even with an anticipated average oil price of $39, and then sees GDP growth accelerating to 0.9% by 2020 (Kommersant, p. 2).
HEADLINE NEWS
A Flydubai Boeing 737 airliner flying from Dubai to Rostov crashed just short of the runway at the Russian city's airport on Saturday, killing all 62 people on board. Investigators believe the crash was likely caused by technical issues or pilot error in the severe weather conditions (Kommersant, p. 1; Vedomosti, p. 12).
BANKING, FINANCE & INSURANCE
The hostility of Russian politicians and the public toward debt collectors, which has escalated since the start of 2016, has given debtors a new argument to not pay their debts. Some have now begun to cite expectations that the debt collection business will be banned soon, collection agencies said. Lawyers believe that this reason will not be convincing in court (Kommersant, p. 1).
Yugra Bank, Russia's 29th largest lender by assets, has imposed restrictions on the amount of retail deposits it accepts on the recommendation of the Central Bank, which became concerned after Yugra's retail deposits more than doubled to over 150 billion rubles in 2015. The bank lent this money to companies and its portfolio surged 137% in 2015. The Central Bank also has other concerns about Yugra, such as excessive lending to affiliated companies (Vedomosti, p. 10).
RETAIL & CONSUMER MARKET
Russia's online retail sector has had a strong start to this year, a report from Data Insight shows. The average daily number of online orders from the largest Russian online stores jumped 30% year-on-year in January and 14% in February. About 75% of online retailers increased sales year-on-year in January and about 67% did so in February, with about a third boosting sales by 50%. Children's goods have seen the strongest growth (Vedomosti, p. 11).
Interview: Maxim Kashirin, Founder and President of Simple Group (Vedomosti, p. 8).
TOURISM
Ensuring flight security might not be the only condition for the return of Russian tourists to Egypt. Russia's tourism chief also wants to demand that Egypt guarantee the security of resort areas and tourist attractions. This might kill travel agencies' hopes of resuming sales of vacations to what was until recently the most popular holiday destination for Russian tourists, but would benefit Russian officials promoting domestic tourism (Kommersant, p. 7).
REAL ESTATE & CONSTRUCTION
The Moscow Region government has approved a transport infrastructure plan for the region to 2035 that focuses on construction of highway links and a 250-km tram line that will connect all airports. The cost of these projects has not been specified, but is likely to be at least 250 billion-300 billion rubles. Analysts believe it will be difficult to find investors for such projects (Kommersant, p. 5).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
Rostelecom has become the leader in dividend payments among Russian state companies. The national telecom provider has paid out an average of 39.8% of IFRS profit in the past five years. Its dividend policy is also most consistent with government requirements - to pay out at least 25% of net profit - and Federal Property Agency recommendations, portfolio investors believe. The company is promising to pay shareholders 75% of free cash flow (Vedomosti, p. 10).
TRANSPORTATION & LOGISTICS
Moscow airports Domodedovo and Sheremetyevo, having secured regulatory approval, are raising flight service fees in March-April, some by as much as 43%. They cite accumulated inflation and modernization costs. Airlines are unhappy as they face an estimated 3 billion rubles in extra expenses per year. This could push up airfares by about 1.5%, analysts reckon (Kommersant, p. 7; Vedomosti, p. 11).