At the “Russia Calling!” forum discussed the limits of stimulating business activity
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Excessive stimulation of growth through preferential programs will require additional tightening of monetary policy, Central Bank Governor Elvira Nabiullina said at the Russia Calling forum. In conditions of excess demand, the forum participants recognized that the key problem was not the lack of financial resources—both banks and companies have enough of them—but the shortage of personnel and the inability of businesses to increase production.
Plenary session of the VTB forum “Russia Calling!” was devoted to discussing the investment potential of the Russian economy under conditions of both external and internal restrictions. Russian President Vladimir Putin assured the assembled investors that the growth rate is ahead of “all leading countries of the European Union” – by the end of the year, growth is expected to be 3.5%, the number of registered foreign companies in the Russian Federation has increased, not decreased, the profit of the real sector for three quarters has increased by quarter, and investment in the third quarter increased by 13.3%.
Other forum participants did not try to initiate a discussion about the negative impact of high rates on business activity; it was proposed to ensure the availability of financial resources for investment in the current parameters of monetary policy. According to presidential aide Maxim Oreshkin, demand in the economy is sufficient and “we are more and more running into a ceiling, when business cannot respond to increased demand by increasing output, but begins to increase prices” – capital should go to those who will make it as efficient as possible apply and increase production capabilities.
The head of the Central Bank, Elvira Nabiullina, in turn, warned against attempts to neutralize the effect of strict monetary policy through the too widespread use of preferential programs – the more of them, the higher the rate the regulator will have to support.
“Everyone else pays for loans to a select few,” the head of the Central Bank explained the key fork in the discussion on stimulating investment activity.
The problem of personnel shortage was recognized as more important than the availability of capital – this issue worried even a Chinese investor, who asked a question from the audience about the prospects for the introduction of industrial robots. In terms of the level of robotization, the Russian Federation really lags behind – it is 15 times less than the world average, noted Maxim Oreshkin. The head of the Ministry of Economy, Maxim Reshetnikov, in turn, called for a solution to the problem in increasing labor productivity, but noted that with an unemployment rate of 3%, “we have been growing for a year already,” statistical data, according to his assumption, will show an increase in hours worked, there is potential and in reducing excess employment caused by mandatory legal requirements.
The fiscal stimulus is also limited by the risks of additional tightening of monetary policy – according to the Ministry of Economy, this year it will amount to 1.4% of GDP versus 2.1% last year. Finance Minister Anton Siluanov described the department’s position (including the prospects for changing tax policy):
“Taxes are a stimulating tool. If we go a little too far with spending, a little more imbalance in the budget, this will affect the subsequent actions of the Central Bank, and the budget and monetary policy should always be coordinated.”
An increase in the volume of borrowing will provoke an increase in the yield of government debt – then the budget will work “not for creation, but for destruction.”
Businesses at the forum were also concerned about issues of currency regulation, including the prospects for tightening capital controls. Elvira Nabiullina repeated the regulator’s previous position that the set of such restrictions should be minimal and only measures related to mirror restrictions in relation to “unfriendly” countries and currency controls related to dubious transactions should be maintained—manipulation of currency flows can stimulate outflows capital in anticipation of further tightening of controls. The position on the temporary nature of capital restrictions was also supported by Anton Siluanov – according to him, the measures already taken “have produced their results” and will be gradually removed in the future – at least the financial and economic bloc is “interested” in this.
VEB will be responsible for technological sovereignty
The government, continuing to build the infrastructure for state support of priority technology projects within the taxonomy, approved a resolution to launch a VEB.RF guarantee program for them on the basis of a “project financing factory.” Let us recall that the taxonomy is a list of priority types of production and services to achieve “technological sovereignty”; it includes projects to create new capacities and technologies in industries with a localization rate of less than 50%, as well as allowing for the reorientation of product supplies from the Russian Federation to “friendly” countries. The measure is aimed at stimulating the production of scarce technological products (such projects receive bank lending at reduced rates due to lower risk coefficients), while it was planned to be supplemented with other measures of state support (see “Kommersant” dated April 27).
The approved program will be highlighted as a separate track in the work of the “project financing factory” (the main one is the issuance of syndicated loans) in order to increase the availability of loans. Thus, for “technological” loans that banks issue within the taxonomy for a period of 3 to 15 years, VEB.RF guarantees will cover from 10% to 50% of the principal amount. We are talking about fairly large projects worth from 1 billion to 20 billion rubles, while the investor’s own funds must be at least 20%. The guarantee limit will be 200 billion rubles, which will allow financing projects with a total value of more than 400 billion rubles. At the same time, as follows from the resolution, such “technological” loans will not be subsidized, unlike syndicated loans that are “usual” for a “factory”, for which the unchanged rates are thus ensured.
First Deputy Head of the Ministry of Economy Ilya Torosov noted that the decision will make it possible to extend risk sharing with the state to projects of technological sovereignty – such projects will become more attractive for business, and their number will increase. “The instrument will allow banks to reduce the burden on capital and expand opportunities for lending to priority projects for the country. The program provides for a simplified procedure for considering applications from credit institutions to provide a guarantee to VEB.RF. Currently, VEB.RF is working with commercial banks,” the state corporation adds. So far, according to Ilya Torosov, seven projects that meet the taxonomy criteria are being implemented. Among them are the construction of a plant for the production of components for batteries and solar panels in the Kaliningrad region, a composite shipbuilding shipyard on Sakhalin, and a nuclear energy research center in the Ulyanovsk region. In general, we are talking about projects in the field of transport and logistics, as well as the production of microprocessors, drones, robotics, and satellites.
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