Considering freezing state pension funds to pay for stimulus
MOSCOW (Reuters) — Russian ministries are asking the government to spend about US$3.5 billion on anti-crisis measures, mostly to help industries hurt by a worsening economic slump, two senior officials said.
There is no guarantee that the aid will be approved, but the fact the ministries are asking for it shows the level of concern about the impact of the slowdown, especially on industries that may have to lay off workers.
On Wednesday, President Vladimir Putin met the central bank head and key government members to discuss Russia's downturn — its worst since the 2008 global financial crisis — and possible stimulus measures to counteract the damage done by low oil prices, Western sanctions and a falling rouble.
Both sources said that at the meeting ministries requested about 270 billion roubles (US$3.53 billion) between them, with the bulk sought by the Industry Ministry. One of the sources said the plan is due to be discussed by the government next week.
There is likely to be tough negotiation inside the government about the amount, which represents 1.6 percent of overall spending in this year's budget.
With prices for oil, Russia's main export, near 12-year lows, the government is riven by clashes between those ministries that want a rescue package for the economy, and the finance ministry trying to keep costs under control.
The 270 billion roubles being sought by ministries will, if approved, be spent in the following way, according to one of the officials who spoke to Reuters.
• About 92 billion roubles on aid to consumer goods manufacturing, the railway machinery industry and the car sector. Of that, 50 billion has already been earmarked for the car industry;
• Around 60 billion roubles on social measures such as supporting employment and offsetting an increase in drug prices;
• The rest split between supporting exports, small and medium-sized businesses, and some other measures. For example 10 billion will finance government credits to bolster the working capital of so far unidentified businesses.
Under the ministries' plan, the money will come from two sources. The first is a 340 million rouble pot the government obtained by freezing the transfer of state pension funds to non-state providers.
Drawing on these funds means there will be less money to pay for an increase in pensions that had been under consideration for later this year.
The other source of money for the proposed support package is 135 billion roubles that the government has already set aside for anti-crisis measures, according to sources who spoke to Reuters last week.
Economy minister Alexei Ulyukayev said on Thursday his ministry proposed spending around 210 billion roubles on anti-crisis measures.
He did not explain what was included in that sum, and it wasn't clear if he had counted all the measures described to Reuters by officials, some of which will be outside the remit of his ministry.
One official said there was already consensus inside the government about the need to disburse 92 billion roubles to help the real economy. Any amount in excess of that is now under discussion.
No comment was immediately available from the finance and industry ministries.
Oleg Kouzmin, an economist at Renaissance Capital, said spending 270 billion roubles would not pose a big risk for the budget deficit.
The government has to spend part of the frozen pension pot, but these funds were initially supposed to be invested in the economy through private pension funds, so it is reasonable to return some of the money to the economy, he said.
He said a more generous anti-crisis plan would not deliver a significant boost to the economy, only a "dead cat bounce," or a small short-term lift without any long-term improvement.