Moscow press review for October 8, 2015
MOSCOW. Oct 8 (Interfax) - The following is a digest of Moscow newspapers published on October 8. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
The Russian economy will adapt to low oil prices and sanctions in 2016-2018 and reduce costs, the Economic Development Ministry states in its new forecast. It expects economic growth to resume in 2016, although consumption and investment will continue to decline. The freeze on contributions to the funded portion of pensions will extend the investment crisis by another year and growth will continue to lag far behind the global average (Vedomosti, p. 1).
Russian regulators' attempts to force foreign shareholders of Russian companies to come out of the shadows and disclose information about themselves have run into stiff resistance. This creates risks for all concerned. Shareholders who refuse to comply with new disclosure laws are losing voting rights and risk not getting dividends, companies see decision making stalled, while Russian registrars are held to account with fines and other penalties (Kommersant, p. 1).
Russia's budget planning commission approved the 2016 draft budget on Wednesday. Despite a 5.1% real cut in spending, the budget deficit in 2016 will be covered by 2.2 trillion rubles in expenditures from the Reserve Fund. The government will not be able to repeat this in 2017, as by then there will only be 1.25 trillion rubles left in the Fund (Kommersant, p. 1).
Russia's Finance Ministry has managed to draft a 2016 budget with a deficit under 3% of GDP and a minimal cut in spending. This will be paid for primarily by the oil and gas sector and pensioners, both current and future. The ministry managed to raise an extra 600 billion rubles at their expense, but proposes to save this money for anti-crisis measures. The government will consider the budget plan on Thursday (Vedomosti, p. 4).
New rules introduced by the Central Bank in August for provision of information about foreign shareholders in Russian companies who want to participate in shareholder meetings have led to a dramatic decrease in foreign shareholders voting. The percentage of foreigners voting at Russian companies' shareholder meetings fell by 15-30% in 2015 due to sanctions and the new requirements could further exacerbate the situation (Vedomosti, p. 11).
OIL & GAS
LetterOne, the group led by Russian tycoon Mikhail Fridman, is in talks to buy stakes in major oil and gas fields in the Norwegian Sea from E.On. Talks are at an advanced stage and the deal could exceed $1 billion. LetterOne is also interested in the Brazilian mobile market and might invest in the country's fourth largest provider, Oi (Vedomosti, p. 11).
Russia's Energy Ministry still hopes to compensate oil companies for the hike in their tax burden in 2016. It is proposing accelerated introduction of the tax on financial result and raising the rate of return threshold for oil export duty discounts to 18.3%. Analysts believe this would actually enable companies to boost investment, but would significantly reduce government revenues (Kommersant, p. 7).
METALS & MINING
The Economic Development Ministry has found that Russian steel was subject to "28 restrictive measures of non-tariff regulation" in various countries as of July 1, 2015. Total losses of Russian steelmakers as a result of international restrictions are estimated at $1.1 billion. In light of this, Russia is not expected to increase steel exports in the period to 2018. The ministry recommends companies participate in investigations of such measures (Vedomosti, p. 12).
TOURISM
Russians have so far booked 40% fewer New Year holiday packages this year compared to a year earlier, with European destinations seeing a drop of 50-60%. The drop in early bookings is attributed primarily to the instability of the ruble. Increasingly budget conscious, tourists are choosing Egypt and domestic winter destinations such as Veliky Ustyug over Europe (Vedomosti, p. 10).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
Rostelecom has gotten serious about monetizing its real estate, which totals 9 million square meters and is worth an estimated 120 billion rubles. The national telecom provider's board will consider a plan to put 3 million square meters of assets into a fund. A stake in the fund will be offered to an investor to be chosen by January. State bank VTB is already showing interest (Kommersant, p. 7).
TRANSPORTATION & LOGISTICS
Passengers of Russian airline Transaero and Ukraine International Airlines have run into problems refunding tickets for cancelled flights, particularly if they were bought through agents. Although explanations are posted on the websites of the airlines and Russia's Air Transport Agency, some intermediaries claim they did not get information about flight cancellations and refund instructions, or impose their own penalties on passengers (Kommersant, p. 1).
The Economic Development Ministry is proposing to spin off locomotives from Russian Railways into a separate subsidiary and thereby increase the transparency of the monopoly's expenditures. There are no plans yet for privatizing locomotive services, which market players have long wanted, but the ministry is proposing to give private carriers access to some routes as long as they provide full services on them, not just in profitable areas (Vedomosti, p. 10; Kommersant, p. 10).