ANNOUNCEMENT 25 Feb 2014In February 2014, the government of the Russian Federation announced a change to private-sector financial support.
NUMBER OF INTERVENTIONS
In early 2014, the Russian government set aside funds to help SMEs cover their interest payment costs.
On February 25, 2014, the Government of the Russian Federation (according to Resolution 254-p) approved the allocation of subsidies in 2014 for co-financing of interest payments on loans, taken by small businesses from Russian banks and agricultural credit organisations. The state support is at the amount of RUB 4.75 billion roubles (ca. USD 130.57 million).
According to the Chamber of Commerce and Industry of the Russian Federation, small and medium enterprises operate in the following main sectors: retail trade (46 %), immovable property transactions (19 %), construction (10 %), processing industry (7 %), and transportation (5 %).
Since agricultural credit organisations participate in the subsidisation scheme, small businesses in the agricultural sector should be also eligible.
This state measure is in line with the 2012 statement of the President of the Russian Federation, Mr Vladimir Putin, that the interests of the economic sectors, agriculture included, who meet the most intensive competition from abroad after the WTO accession, will be considered. Furthermore, in the Annual Presidential Address to the Federal Assembly held on 12 December 2013, Mr. Putin declared: "Companies, registered in foreign jurisdictions, must not benefit from state support, including from Vnesheconombank and state guarantees. Their access to contracts for state orders and for contracts with structures with state participation must be eliminated". In conclusion, although the end beneficiaries of the allocated subsidies to the subjects of the Russian Federation cannot be directly identified, it can be expected that they will be Russian.
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.