New models brought to the Caucasus

The participants of the meeting of the government commission for the development of the North Caucasus Federal District (NCFD), held on Wednesday in Minvody under the leadership of Prime Minister Mikhail Mishustin, assessed the effectiveness of a new approach to increasing the investment attractiveness of this macroregion based on economic development models. A positive trend in investment was recorded – plus 8% in 2022 and a decrease in the traditionally high unemployment in the Caucasus to 10%. At the same time, measures to bring businesses out of the shadows were recognized as insufficient. In addition, according to banks, it is necessary to expand investment support tools.

On Wednesday, May 3, Mikhail Mishustin visited Mineralnye Vody, where, as part of the Caucasian Investment Exhibition, he held a meeting with members of the government commission for the socio-economic development of the North Caucasus Federal District. At the meeting, the interim results of the application of new approaches to increasing the investment attractiveness of the regions were summed up.

Let us explain: at a similar meeting in 2021, the previous state program for the development of the North Caucasus Federal District was recognized as ineffective: despite significant injections from the center, the key socio-economic indicators of the macroregion remained much lower than the Russian average (see Kommersant dated June 15, 2021). After that, the state program was reformatted (see Kommersant dated October 11, 2021) — the models of economic development formed for each region became the key mechanism.

As the head of the Ministry of Economy Maxim Reshetnikov explained, a feature of such models was the linking of target indicators to specific projects (now we are talking about 90 projects, of which 12 have been completed).

In total, Mikhail Mishustin noted, the implementation of breakthrough projects for the North Caucasus Federal District – we are talking primarily about the agro-industrial complex and the hospitality industry – attracted 240 billion rubles. and contributed to the creation of over 9 thousand jobs.

After changing the approach, the authorities record an improvement in performance. According to Mikhail Mishustin, in 2022 the growth of investment in fixed assets amounted to about 8% in annual terms, employment increased by almost 4.5%, unemployment decreased to 10% (this is the lowest figure since 2016, but it is still significantly higher the national average of 3.5%). The growth of industrial production is also recorded (this is also due to the low base effect).

According to Maxim Reshetnikov, the district’s regions are not actively turning to the support measures provided by the government.

For example, through the restructuring of budget loans, they can release and allocate about 38 billion rubles for the construction of infrastructure for the implementation of investment projects, but applications have been submitted for only half of this limit. Banks with state participation, according to the Ministry of Economy, have increased the volume of investment lending in the district by two and a half times over three years. At the meeting, representatives of the banks themselves spoke about the need to expand the mechanisms of financial support for business in the North Caucasus.

The investment potential of the macroregion, said the first deputy chairman of the board of Sberbank Alexander Vedyakhin, is estimated at 1.8 trillion rubles: “We have tools for half of this volume, and we have to improve them for the remaining half.” To finance companies, Sberbank proposes to increase the limit of concessional loans for small and medium-sized businesses, which currently stands at 500 million rubles, ease the requirements for collateral to obtain guarantees, and increase the terms for subsidizing loans for long-term projects (for example, in the field of gardening). In total, such concessions can give 50 billion rubles. additional funding. Another 100 billion rubles. investment, according to Alexander Vedyakhin, could provide an expansion of measures to support infrastructure projects, for example, the introduction of a mechanism for the North Caucasus similar to the Far Eastern concession (assumes reimbursement of up to 100% of the investor’s costs for infrastructure creation within 10–20 years), and the participation of banks in the program infrastructure bonds.

Among the main problems of the North Caucasus, as follows from the speech of the plenipotentiary in the North Caucasian Federal District Yuri Chaika, are the shadow economy and informal employment.

The shadow sector employs up to 50% of the working population, which is twice the average for Russia. As mechanisms for “whitewashing” the economy, the plenipotentiary proposed the development of a system of credit support and the financial base of guarantee funds, as well as a reduction in the tax burden, including on legalized enterprises. The authorities have made progress in control and oversight activities, “but there are not enough effective incentives for businesses and workers to come out of the shadows,” Maksim Reshetnikov admitted. In this regard, the department plans, together with the Ministry of Finance, to “additionally think” about such measures.

Evgenia Kryuchkova, Minvody