Moscow press review for February 1, 2016
MOSCOW. Feb 1 (Interfax) - The following is a digest of Moscow newspapers published on February 1. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
The Russian government is looking for ways to boost the revenues of off-budget funds. Options being discussed include increasing payroll social security contributions and the introduction of a 2% additional copayment into the Pension Fund. The copayment could raise an extra 400 billion rubles for the pension system if all working Russians are required to pay or 50 billion rubles if it is only applied to higher wage earners (Vedomosti, p. 1).
Tensions between Moscow and Ankara have risen further. Turkey's air force is on high alert after reports that a Russian Su-34 strike fighter violated Turkish air space on Friday. Russia shrugged off the report as propaganda, but Turkey's president demanded a meeting with President Vladimir Putin and threatened consequences if Russia continues to violate Turkey's air space. The incident raises the risk of a direct clash between Russia and Turkey, threatening the region with a conflict with unpredictable consequences (Kommersant, p. 1).
The anti-crisis plan submitted to the Russian government on Friday calls for reducing spending from the anti-crisis fund by a third, from 220 billion rubles to 150 billion rubles, although only 10 billion rubles worth of initiatives have been eliminated. The savings will be achieved by shifting some anti-crisis expenditures to the federal budget, with unclear prospects. The money for many anti-crisis proposals has yet to be found (Kommersant, p. 1).
Moscow condemned the U.S. administration on Friday for backing allegations that President Vladimir Putin is corrupt. Putin's spokesman said the statement was outrageous, offensive and unacceptable. Diplomats and analysts are speculating why the United States made the accusation, whether this is a call for regime change or a signal that cooperation will be limited. The Kremlin will retaliate, they believe (Vedomosti, p. 2).
A lack of investment could become the main drag on Russia's economy even after it emerges from recession, the EBRD warned. In order to avoid further growth of the debt burden amid high interest rates, the bank recommends increasing support for small and medium businesses and encouraging an increase in equity investment. But these measures will not work without structural reforms, the EBRD said (Kommersant, p. 2).
Russia plans to reform its system of financial and fiscal oversight, officials said. The Financial Monitoring Service might be eliminated, with its powers divided among the Treasury, the Tax Service and Customs Service. In that case, the tax and customs authorities will collect fines for currency violations themselves. The Monitoring Service had 896.3 billion rubles in uncollected fines at the end of September 2015, including 521.5 billion rubles in bad debt (Vedomosti, p. 4).
Russia hopes to raise 1 trillion rubles from privatization of state assets this year. Candidates for sale include state stakes in oil pipeline monopoly Transneft, oil major Rosneft, Rostelecom and airline Aeroflot. One of the first assets to be sold could be shares in shipping company Sovcomflot. President Vladimir Putin might give the go-ahead to the privatization program at a meeting this week (Vedomosti, p. 10).
OIL & GAS
Gazprom wants to raise gas prices for private Turkish importers, to whom it granted a discount in 2015. Sources claim this is not related to the deterioration of Russia's relations with Turkey, but combined with the current arbitration proceedings against Botas it means uncertainty will continue on the gas giant's second largest export market. Analysts believe the company should be cautious so as not to lose market share in Turkey, as it already has in Ukraine (Kommersant, p. 1).
BANKING, FINANCE & INSURANCE
Russia's Central Bank left its key interest rate unchanged at 11% on Friday, as analysts had expected. In a change from previous comments, the Central Bank is no longer promising to cut the key rate in the near future, and instead warned that monetary policy might be tightened as inflationary risks have risen with the drop in oil prices and weak ruble. It acknowledged for the first time that the inflation target of 4% for the end of 2017 might not be met (Vedomosti, p. 5).
Russian banks saw unusually strong demand for mortgage loans in January. The number of applications received daily was on par with December, when the figure is usually high, market players said. The main reason was that homebuyers want to get a loan before the subsidized mortgage program expires. But with the economic situation deteriorating, mortgages, even at a reduced rate, might turn out to be unmanageable for many borrowers (Kommersant, p. 1).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
Suitors are lining up for new shares in Roscartography, a provider of satellite images for Russia's Defense Ministry and other agencies. Rostelecom is prepared to pay almost 500 million rubles for a 49% stake, while the Space Agency and Rostec are asking the government to give them anywhere from a controlling interest to 100% of the company as an asset contribution. Roscartography's order book just on government programs to 2020 is estimated at 32.7 billion rubles (Kommersant, p. 1).
TRANSPORTATION & LOGISTICS
Pobeda, the low-cost airline of Russian flag carrier Aeroflot, has been unable to start flights to Minsk because the Belarusian authorities are requiring it to clear its prices with local carrier Belavia. The Belarusian airline has refused to endorse Pobeda's planned fares, saying they could destabilize the current competitive situation. Russia's Transport Ministry is drafting retaliatory measures (Vedomosti, p. 10).