RIA NOVOSTI. The State Duma will review on Friday in the second and third readings a draft law that aims to lower rates on subordinated credits. The draft law intends to lower interest rates on funds from National Welfare Fund (NWF), which were put on deposits with Vnesheconombank, to 6.25% and 7.25% from 7% and 8.5%, respectively.
As a consequence, interest will also be lowered on subordinated loans provided by VEB using these deposits to 6.5% from 8% (under the one-to-one scheme) and to 7.5% from 9.5% (under the one-to-one scheme). Moreover, the draft law calls for cutting to 6.5% from 8% the interest charged for the subordinated loan that was issued to Sberbank of Russia by its major shareholder, the Bank of Russia. Amendments will be made to Article 5 of the Federal Law “On Taking Additional Measures to Support the Financial System of the Russian Federation”.
For the second reading the Duma’s committee recommended adopting an amendment, according to which the rules of use of subordinated credits and terms for NWF funds to be deposited with VEB should be brought in compliance with the adopted draft law no later than 30 days from the day when its provisions take force.
Previously the government’s positive opinion about the draft law reached the State Duma. The document noted that the execution of the draft law will lead to a contraction in budget revenues. A shortfall in budget revenues from July 1, 2010 through December 31, 2020 will total Rub 35.7 bln. If the new interest rates take effect starting October 1, 2010, until December 31, 2020 a shortfall in revenues will amount to Rub 34.8 bln.
“It is necessary to note that the amendments proposed are driven by the macroeconomic environment that has formed in the Russian economy," the opinion said.
Many times during 2009 and in the first half of 2010 the Bank of Russia lowered the refinancing rate, in the aggregate from 13% to 7.75%. From January till May inflation came in at 4% or 2.8% less than in the same period a year ago, the document pointed out. Average rates on ruble-denominated loans provided by lending institutions in April 2010 to households stood at 26% (repayable within 12 months) and 18.5% (for a term of 12+ months), 11.4% on credits extended to non-financial institutions (due within 12 months) and 12.8% (to be paid back in 12+ months).
