Wealth and Investing Center

FACTBOX: How Russian authorities are tackling economic crisis

MOSCOW | Mon Dec 29, 2008 7:29am EST

MOSCOW (Reuters) - Russia's Duma lower house of parliament on Wednesday passed more anti-crisis measures, extending the term of collateral-free loans and allowing the central bank to place observes in banks who receive state aide.

Moscow has pledged over $200 billion to stave off the crisis, which has already seen companies cut jobs, salaries and investment plans, forced consolidation in Russia's 1,000-plus banking sector and prompted a rise in corporate debt defaults.

Following is a summary of measures announced so far.

CORPORATE DEBT

-- Key companies given $50 billion from Russia's reserves to help refinance foreign debt, with money distributed by state entity VEB. Demand has exceeded supply, and officials have said it is possible the cash pot will be increased.

FISCAL MEASURES

-- Profit tax cut to 20 percent from 24, while a new depreciation mechanism will allow firms to cut tax bills further

-- Shares held for over a year exempt from profit tax, further plans to liberalize taxation of securities market

-- Further tax cuts for oil and gas sector to be announced

-- A three-month extension for quarterly valued added tax (VAT) payments, usually a big drain on banking sector liquidity

-- Govt allowed to move funds between different budget areas

BANKING SYSTEM SUPPORT MEASURES

-- Banking sector given 950 billion rubles ($36 billion) from the budget and oil wealth funds in subordinated loans; 500 billion of that direct to state-owned lending major Sberbank SBER03.MM, the rest given to VEB to distribute to other banks

-- Bank deposit guarantees increased to 100 percent of the first 700,000 rubles, equal to around 40 average monthly wages

-- Collateral-free loans introduced to boost banking sector liquidity, given out by c.bank for terms of up to one year

-- Access to central bank's refinancing widened to banks classed as having problems; investment firms may also be added

-- Lombard list of collateral accepted by c.bank widened by lowering required ratings, including mortgage-backed securities

-- Major banks partially compensated for any losses sustained as a result of lending money on the interbank market

-- Max term of c.bank lombard, repo auctions upped to 1 year

-- Banks receiving support to get a c.bank representative to help ensure the money trickles into the economy.

ROUBLE

-- Regular interventions to support the ruble, totaling over $100 billion since mid-August to support the ruble.

-- From November 11 Russia has embarked on a gradual path of ruble depreciation

-- Banks urged not to raise net foreign currency longs nor foreign denominated assets until the year-end; compliance taken into account in allocating central bank's collateral-free loans

-- Daily limit set on currency swap operations with the central bank, overnight currency swap rate raised to 13 percent

-- Euro and dollar deposit accounts for commercial banks at the central bank to limit capital flight

RESERVE REQUIREMENTS, INTEREST RATES

-- Raised rates, taking the refinancing rate to 13 percent

-- Banks' reserve requirements slashed to 0.5 percent across the board, representing cuts of between 5 and 8 percentage points since September, depending on the type of liabilities. The cuts are estimated to free up around 370 billion rubles

MARKETS

-- 350 billion rubles of budget funds for buying shares and corporate bonds over this year and next, orchestrated by VEB

-- Former central bank deputy chairman Konstantin Korishchenko appointed head of MICEX exchange

-- Stocks trading halted on numerous occasions to the consternation of some market participants

-- Trading suspension rules changed several times. Currently prescribe a one-hour trading halt if technical indexes rise by more than 10 percent or fall by more than 5 percent. A rise of over 20 percent or a fall over 10 percent means a suspension until the end of the following trading day

-- MICEX exchange widened parameters for daily ruble moves versus euro or dollar to +/- 1.75 percent and has increased the requirements for advance deposits on currency trades

REAL ECONOMY

-- 300 companies with sales of no less than $540 million and employing no fewer than 4,000 people will receive state support; government says ready to extend the list to 1,500.

-- Plan to amend the 2009 budget to allocate 300 billion rubles ($10.79 billion) in state guarantees on loans taken out by enterprises from the list as well as defense industry firms.

-- Pledged 175 billion rubles in loans to real economy

-- State to buy real estate to support construction sector

-- Small, medium firms to get 30 billion rubles from VEB

POLITICS

-- Presidential term extended to 6 years from 4, parliament term to 5 years from 4 to boost political stability

-- Unemployment benefit raised to 4,900 rubles ($175), tax breaks for home buyers, support and training for job seekers

-- Russia insists it is sticking to social spending plans

(Compiled by Toni Vorobyova and Gleb Bryanski)

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