Russia to more than double state borrowing in 2020

MOSCOW, July 2 (Reuters) - Russia plans to more than double its state borrowing this year to fund a rising budget deficit, with spending increasing to overcome the coronavirus crisis, aggravated by low oil prices, Deputy Finance Minister Vladimir Kolychev said.

The economy is on track to shrink by nearly 6% in 2020, taking a hit from the coronavirus-related lockdowns and a global agreement to cut oil output.

The finance ministry plans to borrow 5 trillion roubles ($71 billion) in OFZ treasury bonds this year, Kolychev told reporters in a briefing this week for publication on Thursday. Russia had initially planned to raise 2.3 trillion roubles in OFZs in 2020.

Risks of Western sanctions against holdings of Russia’s state debt now seem to be at the same level as in the past six months, Kolychev said.

Russia’s budget deficit may rise to 5% of gross domestic product this year as the country will spend 2 trillion roubles on supporting sectors most hit by the crisis and another 800 billion roubles on buttressing households’ incomes, he said.

Russia will also spend up to 300 billion roubles from its National Wealth Fund in 2020, he said, adding that the OPEC+ agreement to cut global oil output will cost Russia 1.2% of GDP in 2020 and in 2021.

Total direct budget spending to fight economic fallout from the coronavirus is seen at 4 trillion roubles, Kolychev said.

Kolychev also said the finance ministry expects state-run companies, including the two largest lenders Sberbank and VTB, to pay 50% of last year’s profit in dividends.

The finance ministry will insist that oil pipeline monopoly Transneft pays 50% of its 2019 net profit in dividends in a payout that could be postponed to later this year, Kolychev said. (Writing by Andrey Ostroukh Editing by Katya Golubkova and Peter Graff)