The Ministry of Industry and Trade wants to return preferential loans for working capital to the auto industry

The Ministry of Industry and Trade will again try to reduce the burden on the automobile industry: the program of preferential loans for working capital may be resumed for the industry and other machine manufacturers. The search for funds is still ongoing, while the Ministry of Industry and Trade estimates the need at 10–12 billion rubles. for subsidizing up to a preferential rate of 12% per annum. Kommersant’s interlocutors indicate that, together with deferring the payment of the recycling fee, this will help neutralize the effect of the rate increase by 80%.

The Ministry of Industry and Trade of the Russian Federation is working on restarting the program of preferential loans for working capital for systemically important enterprises, primarily mechanical engineering, said First Deputy Minister Vasily Osmakov. “I am now, in particular, trying to restart Resolution 393. This is preferential revolving credit for systemically important enterprises, which worked remarkably well last year, pumping a trillion in preferential loans into the economy when nothing was credited at all,” he said (quoted by Interfax). The deputy minister noted that the measure is needed against the backdrop of an increase in the Central Bank rate, while agreeing that “no subsidies will be enough to solve this problem” for the entire industry.

The Ministry of Industry and Trade explained to Kommersant that we are talking about 10–12 billion rubles, “but the amount may vary depending on further dynamics of the rate.” Kommersant’s sources note that these expenses were not included in the budget, so a search for funds is underway. Director of the Department of Financial Banking and Investment Development of the Ministry of Economy, Alexander Kirevnin, noted in October that more than 40% of lending in the corporate sector now consists of loans with a floating rate. Speaking about sources of funding to subsidize rates, he said that “from a budget point of view, this is a return to certain taxes.”

At the same time, in the explanatory note to the draft amendments to Resolution 393, prepared in November, the Ministry of Industry and Trade estimated the need for financing at 8 billion rubles. The planned source was the government reserve fund. The project, in addition to automobile factories, includes manufacturers of electrical equipment, general purpose machinery and equipment, machinery and equipment for agriculture and forestry, as well as semi-trailers.

In 2022, Resolution 393 made it possible for systemically important enterprises to receive loans at a preferential rate of 11% to replenish working capital. The loan for one enterprise was limited to 10 billion rubles. for a year, for a group of companies – up to 30 billion rubles. In 2023, another 24.7 billion rubles were allocated to subsidize loans issued in 2022, of which 24.3 billion rubles. already spent.

The new conditions include a preferential rate of up to 12%. Loans must be taken out after October 27, 2023.

AvtoVAZ, in particular, speaks about the need to resume the program from the end of October. “If AvtoVAZ spends about 10 billion rubles this year. to service loans to banks, then next year, due to rising rates, expenses will already amount to 17 billion rubles,” said Sergei Gromak, vice-president of the automaker, at the Federation Council. Later, GAZ called subsidies an “urgent necessity.” They noted that the loan portfolio of car factories was formed mainly from the costs of creating current model ranges and localization in accordance with Resolution 719.

The auto industry, in addition to the planned resumption of rate subsidies, should also receive a deferment in paying the recycling fee to the budget. The latter makes up a high share of enterprise expenses (see Kommersant, November 21). These measures together, Kommersant’s industry interlocutors believe, will greatly improve the position of industry players. One of them notes that the effect of the Central Bank rate increase will be neutralized by 80%.

Automotive analyst Vladimir Bespalov says that given the current cost of loans, 12% looks like an attractive rate. Sergei Udalov from Autostat adds that now everyone in the industry understands that the market will slow down, and therefore more working capital will be needed.

Olga Nikitina