Moscow press review for June 2, 2015
MOSCOW. June 2 (Interfax) - The following is a digest of Moscow newspapers published on June 2. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
Profit tax revenues in Russia have surged since the start of the year on the back of the ruble's depreciation, deoffshorization and optimization of taxation. Consolidated profit tax revenue rose 9.2% year-on-year in the first quarter and 28.8% in January-April. The unexpected revenue growth comes at an inopportune time for the Finance Ministry as it gives lobbyists another argument in favor of increasing spending (Vedomosti, p. 1).
The Russian government has decided on the amount that it can afford to spend on state investment in 2016-2018. The relevant commission has cut allocations requested by ministries by a third to 1.78 trillion and 1.79 trillion rubles per year for 2016 and 2017, and by 40% to 1.6 trillion rubles for 2018. Officials attribute this to the tight budget, but it actually continues a trend: budget investment spending as a share of GDP has fallen steadily from 3.1% to 2.1% from 2009 to 2015 (Kommersant, p. 1).
The Russian government on Monday approved a moratorium on increases for a large portion of nontax fees and levies, such as environmental levies and insurance rates for hazardous sites, until 2019. As a result, businesses could save about 1.5 trillion rubles, an official said. The cost of the Economic Development Ministry's initial proposals for the moratorium was 300 billion rubles higher (Vedomosti, p. 4; Kommersant, p. 2).
The chairman of the Civic Initiatives Committee, former Deputy Prime Minister and Finance Minister Alexei Kudrin does not rule out rejoining the government if it commits to reforms, including political ones. Analysts believe his return to government is only be possible if there is a change in the "political course," since all the reform projects developed by CIC have a "liberal bent" (Kommersant, p. 2).
Russia's economic slump deepened dramatically in April, with GDP falling 4.2% year-on-year compared to 2.7% in March, bringing the contraction to 2.4% in the first four months of 2015, the Economic Development Ministry estimates. The ministry has acknowledged the slump is deepening and this is confirmed by leading indicators for industry in May. However, rising oil prices and the steady slowdown of inflation are improving short-term forecasts for the time being (Kommersant, p. 2).
OIL & GAS
Interview: Mikhail Sutyaginsky, Co-owner and Chairman of Titan Group (Vedomosti, p. 8).
UTILITIES
Rosatom, which aims to expand its order portfolio by 50% to $150 billion by 2020, has for the first time announced the possibility of raising foreign financing. Chinese banks and energy companies are being considered as possible investors. Until now, one of the state nuclear corporation's advantages on the world market for nuclear power plants has been the financial support of the state, but now state funding is dwindling while Rosatom is continuing to fight for new markets (Kommersant, p. 7).
METALS & MINING
Tuva Energy Industrial Corp has been unable to get the 86.86 billion rubles from Russia's National Welfare Fund that it was promised a year ago for the Elegest coal field because NWF money is only released if loans have been granted from state banks, but the latter are refusing to lend for the project without state guarantees and a final decision on the allocation of NWF money. This could delay the development of the field, but analysts believe there is no reason to hurry since coal prices are only expected to recover in three to four years (Kommersant, p. 9).
BANKING, FINANCE & INSURANCE
About 121,000 individuals have received insurance payouts for deposits at two or more Russian banks, Deposit Insurance Agency data show. They account for about 10% of the depositors of failed banks, but about 25% of all the insurance payouts made by the agency. Ninety-two individuals received payouts for deposits at more than 20 banks. The head of Sberbank has proposed restricting the number of insurance payouts per depositor (Vedomosti, p. 10).
RETAIL & CONSUMER MARKET
The share of Russian consumers who expect the economic situation to improve before the end of the year grew to 35% in May from just 11% last fall, a report from advertising group ADV shows. Nonetheless, consumers are reducing spending more than before, including on appliances, clothing, footwear and household goods. More than half also expect to save on vacations this year by staying home all summer or just going to their dachas (Kommersant, p. 1).
Russia has tumbled nine rungs to 21st place in the A.T. Kearney Global Retail Development Index, which ranks the top 30 developing countries for retail expansion. The authors cite the "perfect storm" in the Russian economy and the political crisis over events in Ukraine. Last year Russia jumped 12 places in the index as its potential for expansion of international retail chains was deemed to outweigh country risks (Vedomosti, p. 11).
Chinese e-commerce giant Alibaba Group has registered the new company LLC Alibaba.com (RU) in Russia to further expand its business, support partners and facilitate relations with government agencies. Alibaba's online retailer AliExpress is the most popular online store in Russia, with 15.6 million shoppers per month, several times more than the number of shoppers from Russia on eBay and Amazon (Kommersant, p. 7).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
Leading Russian mobile services provider MTS is introducing a rate option that offers free incoming calls on intra-network roaming within Russia. The company wants to bolster demand for this service, since demand for international roaming is falling. Domestic roaming traffic has been growing by up to 10% per month since the start of the year, an MTS official said (Vedomosti, p. 11).
TRANSPORTATION & LOGISTICS
The Russian prime minister backed businesses and gave orders to lower tolls on heavy trucks, which were expected to generate 50 billion rubles in revenue annually starting in November. The tolls could be slashed by almost 85% and might only be enough to pay the operator of the new system being built to collect them - a company owned by RT-Invest and the son of billionaire Arkady Rotenberg (Vedomosti, p. 10).
