Moscow press review for June 23, 2015
MOSCOW. June 23 (Interfax) - The following is a digest of Moscow newspapers published on June 23. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
Russia's Finance Ministry presented its proposals for the 2016-2018 budget at a meeting with the prime minister on Monday. In addition to foregoing indexation of pensions for current inflation in 2015, the ministry proposes dozens of new initiatives to cut social spending, which has grown far faster than the country's revenues since 2006. The government is supposed to make a decision on the cuts by June 25 (Kommersant, p. 1).
The Kremlin has announced a tender for a series of studies into new threats to national security, methods for conducting negotiations to resolve international crises, the strategy for development of the Eurasian Economic Union in the new political realities and Crimean issues. The starting price for eight lots is 13.3 million rubles. One of the most expensive studies will be on the "hostile use" of information and communication technologies (Vedomosti, p. 1; Kommersant, p. 5).
Following the Russian Education Ministry's publication of data on university graduates' salaries last week, recruitment company HeadHunter has released a study on how graduates' salaries change in the early years of their careers. It shows the most lucrative jobs are in banking, law and programming, which over time pay more than other jobs. Experts also said that the current crisis has not had a major impact on graduates' salaries (Kommersant, p. 1).
Former Yukos president Mikhail Khodorkovsky promised in an article to table a liberal program for Russia's development. If the authorities continue their current policies, Russia will hit a brick wall in 2025, he warns. Analysts noted the similarities between Khodorkovsky's forecasts and diagnosis of the situation in the country with the views of former Deputy Prime Minister Alexei Kudrin (Vedomosti, p. 2).
The European Union on Monday officially extended sanctions against Russia for another six months. In response, Russia is preparing to renew restrictions on food imports. The prime minister has ordered the government to draft an updated resolution with a list of banned goods. It is not clear yet how the list might change (Vedomosti, p. 4).
Russia's Federal Anti-Monopoly Service, unable to effectively conduct investigations involving foreign companies, is proposing to create an international organization to combat cartels. The regulator has already drafted an international convention that is being cleared with government ministries, and it could be signed as early as this fall (Vedomosti, p. 4).
Interview: Ksenia Yudayeva, First Deputy Chairman of the Central Bank of Russia (Vedomosti, p. 8).
METALS & MINING
Russian state corporation Rostec is establishing a new entity to which it will transfer stakes in assets with potential to attract investors. These include blocking stakes in titanium producer VSMPO-Avisma and Yota Devices, and 100% of RT Global Resources. Rostec believes the new holding will be able to attract investment with greater transparency and analysts agree (Kommersant, p. 7).
Koks Group, a major Russian pig iron and coke producer, plans to build a steel mill in Tula with annual capacity to produce 1.75 million tonnes of long products. The project company has already raised an eight-year loan of about 20 billion rubles for the 35-billion-ruble project. Upon completion of the mill in 2017, Koks will no longer be the world's biggest exporter of merchant pig iron (Vedomosti, p. 11).
BANKING, FINANCE & INSURANCE
A number of recent deals in which Russian nongovernmental pension funds bought shares in banks have raised questions at the Central Bank about the fairness of the price, such as a deal in which Promsvyazbank was given a higher valuation than top lender Sberbank. But the regulator might not know about all the terms of such deals. Sources said the bank owners are guaranteeing a return to the funds and, possibly, their shareholders (Vedomosti, p. 1).
The debt load in the Russian economy exceeds the equilibrium level and the debt burden in certain sectors threatens general financial stability, Central Bank analysts conclude in a new report. Central Bank calculations show that demand for new loans in the corporate sector will not grow at least until 2016 even if monetary policy is loosened further (Kommersant, p. 2).
RETAIL & CONSUMER MARKET
In response to the EU decision to extend economic sanctions against Russia, the country's government is considering introducing a VAT on tickets to foreign films. They accounted for 82% of box office receipts in Russia last year, or 38 billion rubles. This means movie theatres would have to pay almost 7 billion rubles, while Russia could face new problems with the World Trade Organization (Kommersant, p. 1).
Russian pharmaceutical associations have sent a letter to Prime Minister Dmitry Medvedev asking him not to allow the legalization of parallel imports of drugs. Industry representatives believe this will put low quality drugs on the market and undermine the investment appeal of the pharmaceutical industry. All relevant government agencies except the Federal Anti-Monopoly Service are opposed to parallel imports of drugs, a source said (Vedomosti, p. 11).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
Roaming services are much cheaper for travellers from Russia in European Union countries than they are for EU tourists visiting Russia, Content Review claims. Moreover, individuals travelling within the Russia-led Customs Union pay far less for roaming than EU residents travelling to neighboring countries. The Federal Anti-Monopoly Service has long called for Russian mobile providers to lower roaming charges (Kommersant, p. 1).
The board of MegaFon, one of Russia's top three mobile providers, has approved the acquisition of 100% of Gars Telecom, a provider of communication services to large corporate customers in Moscow and St. Petersburg. The deal would boost MegaFon's market share in this segment, which is a stable business even in times of crisis. Gars Telecom could be valued at 2.5 billion-3 billion rubles including debt, analysts reckon (Vedomosti, p. 10).
AUTOMOTIVE & ENGINEERING
Avtovaz, Russia's biggest carmaker suspended assembly of all automobiles on Monday due to problems with supplies of components such as seats and exhaust systems. The situation is not expected to hurt dealers, as there is sufficient inventory to meet demand in the shrinking market. Avtovaz, which has excess capacity, is expected to easily make up the lost time (Vedomosti, p. 10).
