ANNOUNCEMENT 26 May 2020

On 26 May 2020, the Russian government decided fishing and fish farming, forest product processing, fish, crustacean and mollusc canning wll be eligible for the subsidized loans programme, effective 5 June 2020. The government website claims the firms need state support in the wake of the COVID-19 outbreak.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

Resolution of the Russian Government N748 dated 26 May 2020, О внесении изменений в Правила предоставления из федерального бюджета субсидий российским кредитным организациям, международным финансовым организациям и государственной корпорации развития "ВЭБ.РФ" на возмещение недополученных ими доходов по кредитам, выданным заключившим соглашения о повышении конкурентоспособности сельскохозяйственным товаропроизводителям (за исключением сельскохозяйственных кредитных потребительских кооперативов), организациям и индивидуальным предпринимателям, осуществляющим производство, первичную и (или) последующую (промышленную) переработку сельскохозяйственной продукции и ее реализацию, по льготной ставке (On Amending Rules of Subsidizing Russian Credit Organizations...on Incomes Falling Out from the Loans to Agricultural Producers and Processors who Entered into Competitiveness Enhancement Agreements), http://government.ru/news/39765/, http://gov.garant.ru/SESSION/PILOT/main.htm, http://static.government.ru/media/files/nHPbd5EDbXXPpqSK7xKYu6XTeAi4PrZ1.pdf

Inception date: 05 Jun 2020 | Removal date: 01 Jan 2023

Export subsidy

On 26 May 2020, the Russian government expanded the list of agricultural subsectors eligible for subsidized loans conditional upon entering into a competitiveness enhancement program. The government added fishing and fish farming, forest product processing, fish,  crustacean and mollusc canning, effective 5 June 2020. The government website claims the firms need state support in the wake of the COVID-19 outbreak.

Agricultural producers and processing companies should sign a "competitiveness enhancement contract" with the Russian agriculture ministry. Once the competitiveness enhancement program is approved by the ministry and the company is in the designated register, it is eligible for short-term loans or investment credits.

There are short term loans (up to 1 year) to purchase raw materials and investment loans (2-15 years) to construct new or upgrade existing facilities and breeding stock.

The program is nested under the new federal government budgetary support program titled "Exports of production of the agro-industrial complex", whose aim is to increase Russia's agricultural exports.

Interestingly, the presentation of the program by the Russian ministry of agriculture mentions the potential risk of WTO complaints, should the volume of agricultural exports be chosen as an indicator of the program's effectiveness, recommending instead to monitor the volume of production transported through logistics hubs agreed on by the loan-taker and the government. Despite the "logistics hubs" workaround, the government website describing COVID-19-related support measures and legislation formalizing such support continues to refer to "exports in exchange for subsidized loans." (see sources listed).

To be eligible for short-term loans, a company should have transported goods worth at least 25% of the value of the required loan through the listed hubs in the preceding year, with the annual growth threshold of the value set at 3%. 

To be eligible for investment loans, a company should commit to a) maintaining its existing volumes of goods transported through listed hubs and b) increasing the annual amounts by 5%-35% of the value of the loan, depending on the loan maturity and the product concerned. 

The 2020 federal budget lists the following allocations under the program, for all eligible sectors: 90 billion rubles for 2020, as well as projected allocation of 84 billion for 2021 and 88 billion for 2022 (USD 1.4 billion, 1.3 billion and 1.3 billion respectively). 

On 14 May 2020, in the framework of state support measures to the local economy, the government suspended the application of eligibility criteria (volume of goods transported through listed hubs). The agricultural companies will continue to pay subsidized interest payments in 2020, even if they fail to meet their export/listed-hub-transportation indicators for that year. The export-requirement waiver entered into force on 15 May. 

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