Global Trade Alert

On September 4, 2015, the Government of the Russian Federation approved Decree No. 934. It has two main purposes:

1. to prolong in 2015 the realised in 2011--2014 (on the basis of Decree No. 1215 of 31 December 2010) issuance of state guarantees on credits drawn by organisations that belong to country's defence complex in connection to state orders with the Russian Ministry of Defence;
2. to authorise the concrete issuance of state guarantees at the amount of RUB 8.33billion (ca. USD 123.19 million) on loans extended to the following 6 defence enterprises that fulfil state defence orders:

• Aviation Holding Company "Sukhoi";
• "Research and Production Company" Technology";
• "Kurgan Machine-Building Plant";
• "Russian Aircraft Manufacturing Corporation" MiG";
• "Kaluga Research Radio Engineering Institute";
• "Tupolev".

The maturities of the state guarantees were not disclosed. Since the credits they cover under Decrees No. 1060-p/16.06.2014, No. 1825-p/15.09.2014 and No. 2392-p/27.11.2014 expire on 31 December 2018, it may be expected that the state guarantees will remain valid as a minimum until this date because they secure their repayment.
 
This state measure has the goal of expanding the capacity of the beneficiaries to attract non-budgetary sources of funding and carry out state tasks related to the execution of the state defence orders where the federal funding is received in the form of deferred payments.

The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.