Subsidy for you know what – Newspaper Kommersant No. 187 (7388) dated 10/10/2022

To a large extent, the resilience of the Russian economy to external shocks can be explained by the government’s experience gained in times of COVID-19 in making simple and quick decisions that give companies time to adapt. However, emergency solutions have a downside: their effectiveness gives rise to the temptation to endlessly expand their application to areas in which the state previously claimed systemic policy.

An example is the decree signed at the end of last week by Prime Minister Mikhail Mishustin on expanding the use of preferential loans for the purchase of de facto priority imports for the economic needs of importers – payment for design and commissioning, as well as payment of VAT and duties: a new version of Decree No. 895 dated On May 18, 2022, this allows.

The very program of preferential lending for the purchase of critical imports, we recall, was launched in May, loans under it are issued at a rate of up to 30% key plus three percentage points (now – 5.25% per annum), for the purchase of raw materials and components – for a year, for equipment – on three. The list of priorities includes raw materials, building materials, machine tools, agricultural machinery and electronics, 37 billion rubles have been allocated to subsidize rates. This support for “critical” imports was prepared in May-June on the back of understanding how many final and intermediate goods, raw materials and equipment are not produced in the Russian Federation and the absence of which can stop entire sectors of the economy. And the inclusion in it of the opportunity to spend such soft loans for non-core purposes does not look systemic at all: funds for subsidizing the design and launch of production are already allocated to the Ministry of Industry and Trade and the Industrial Development Fund, and the mechanism of tax and customs deferrals and loans is not new for the Russian Federation.

However, it is not very important for business whether the government provides it with the necessary profitability “urgently” or “systemically”. The White House itself understands this, directly stating that the adopted “decision will allow us to support the work of enterprises.” However, only until the time when emergency support is curtailed. This problem is also already known to the White House in the wake of the pandemic – in the form of turbulences due to the reduction of covid payments to doctors or the exit from the moratorium on bankruptcies. And in this case, the proposal of the Ministry of Finance also made last week (see “Kommersant” dated October 4) to dismantle the current structure of state support, in which such “emergency” tunnels now have to be punched, and move on to the general principle “public money is received by the one who gives result even looks promising, although big business does not like it, whose corporate lawyers are sometimes better versed in the current mixture of emergency and systemic measures than the state itself.