The government returns the road construction support program

The White House is resuming the 2021 program to subsidize preferential loans for the early execution of government contracts related to the construction of roads. The return of state support will take place on softer terms than before – the rate on preferential loans for borrowers is reduced from 10% to 3% per annum, and the amount of compensation for lost income by banks is increased to 100% of the key rate.

The government has resumed the program of concessional lending for road construction projects. As Prime Minister Mikhail Mishustin said yesterday at a meeting with his deputies, 700 million rubles will be allocated for its implementation over the next four years.

The program is being resumed on softer conditions – if in the previous version the rate on loans was up to 10%, now it will be possible to take them at only 3% per annum. Let us explain, we are talking about the program of preferential loans in force in 2021 for the early execution of state and municipal contracts related to the construction of roads – federal, regional, intermunicipal and local. Priority right to receive state support is for projects implemented as part of a comprehensive plan for the modernization of the main infrastructure, a five-year plan for road activities, the Safe and High-Quality Roads national project, as well as on instructions from the president and government.

The mechanism for providing a preferential rate is traditional – the budget compensates banks for lost revenues due to its application. However, the conditions for such subsidies, as follows from the government decree, have somewhat softened – if in 2021 the state compensated for the difference between the key and preferential rates, now the subsidy will be provided in the amount of 100% of the key rate (now – 12% per annum).

As follows from the words of Mikhail Mishustin, the government expects that such a decision will ensure timely financing of “important infrastructure projects” and support contractors working in the field of road construction. This mechanism will complement the already existing set of tools to support road construction – such projects can also qualify for treasury loans for advanced financing of infrastructure and for participation in the program for restructuring budget loans (involves the allocation of freed up funds by the regions for the implementation of investment projects).

It should be noted that in connection with the plans for the early implementation of the national project “Safe and high-quality roads” (the indicator for the repair and construction of road infrastructure is planned to be achieved a year earlier, by the end of this year), the government has more than once “supported the ruble” to accelerate the construction of such facilities. For example, since 2020, the practice of allocating additional funds for road construction at the expense of future limits has started.

Evgenia Kryuchkova