ANNOUNCEMENT 24 Apr 2020

On 24 April 2020, the Russian government announced an interest payment subsidy to companies with the status of systematic importance to the national economy. 

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

Government of Russia. Resolution N582 dated 24 April 2020 Об утверждении Правил предоставления субсидий из федерального бюджета российским кредитным организациям на возмещение недополученных ими доходов по кредитам, выданным в 2020 году системообразующим организациям на пополнение оборотных средств (On approval of the Rules for the provision of subsidies from the federal budget to Russian credit organizations for reimbursement of shortfalls in their income on loans issued in 2020 to systemically important organizations for working capital replenishment); Decree N1134-r dated 24 April 2020, http://government.ru/docs/39573/

20 May update: Resolution N712 dated 20 May 2020, http://government.ru/news/39728/, http://static.government.ru/media/files/uICkFlXYML2w9Gu5DxSvqQRApiyy3id6.pdf

Ministry of Industry and Trade, List of Systemic Companies: http://minpromtorg.gov.ru/activities/sistema/

Inception date: 24 Apr 2020 | Removal date: 01 Jan 2021

Interest payment subsidy

On 24 April 2020, the Russian government allocated 24 billion rubles (USD 322 m) from the emergency-times Reserve Fund to the Russian commercial banks to service the program of interest payment subsidies benefitting companies with the status of "systemic importance to the national economy".

The program covers loans issued in 2020, towards replenishing operating funds. Eligible loans cannot extend maturity of 12 months, surpass the amount of 3 billion rubles (USD 40.2m) and carry an interest rate of more than 5%. Since the government covers interest rate expenses in the amount up to the Central Bank's basic rate (5.5%), the interest payments on eligible contracts are covered in full.

Companies of "systemic importance to the national economy" are documented in the list compiled by the Ministry of Industry and Trade. To make it to the list, the company needs to be one of the following:

  • major/only employer of a municipality, with significant influence on regional economy
  • defence contractor or first-degree subcontractor
  • operator of critical infrastructure or defence services in Crimea, Sevastopol, Kaliningrad or Far East Federal District
  • a company active in the research and development of critical technologies or software 
  • companies active in information security, programming and servicing government IT systems, Internet-based services of public significance (the later formulation is often used referring to the Russian search engine Yandex)
  • transportation companies serving distant domestic locations
  • dominant market players under the Russian competition law. 

The list of companies published by the industry ministry spans 25 sectoral groups, ranging from the automotives to the furniture.

While the government decree and resolution under question do not mention the COVID-19 as the grounds for the disbursement, the two documents are filed under the category "Government measures to support the economy during the COVID-19". Moreover, the disbursement of the funds from the emergency Reserve Fund rather than from the Federal Budget suggests the intervention was not planned for the year 2020. 

On 20 May 2020, the Government extended the interest payment subsidies to the subsidiaries of the companies of systemic importance, while at the same time introducing two conditions to the beneficiaries: 

  1. maintaining employment at minimum 90% of the 1 May 2020 level
  2. only companies whose sales in April-June of 2020 were at least 30% less than those of April-June 2019 are eligible for the interest payment subsidies. 

The amendments entered into force on 21 May 2020. 

AFFECTED SECTORS

 
N/A

AFFECTED PRODUCTS

 
N/A