The briefing was focused on the plan of priority actions for sustainable economic development during the spread of the novel coronavirus infection.
Excerpts from transcript:
Maxim Reshetnikov: Good afternoon, colleagues.
The main goal of the Government anti-crisis measures is to maintain employment and support companies. To this end, we have to let companies use all their resources for employee wages. So the Government is implementing a bailout plan in line with the President’s instructions. The main elements include the following.
First, deferrals of tax and fee payments for small and medium-sized businesses in hard-hit industries. Over 3 million people are employed in the heavily effected sectors. The total amount of deferred payments for 6 months will total about 140 billion roubles. In other words, businesses will be relieved from paying this amount in taxes at all levels.
Second, a delay in loan repayment. The Government has approved a programme under which all loan repayments can be postponed for six months. To clarify, loan repayments are not just being moved from April to October when a double payment has to be made, but the installment schedule will be pushed back six months. And, there is also a mechanism to write off the interest under these loans. One third will be paid by the bank, one third covered by subsidies from the federal budget, and one third by the entrepreneur, who can decide whether to pay the interest in equal parts by installments or add it to the loan and, in fact, not to pay anything for six months. We hope this programme will cover 10 percent of the total loan portfolio of small and medium-sized businesses and will relieve businesses from having to pay 115 billion roubles over this period, according to our estimates.
Third, we have specified new requirements for current programmes on business refinancing and eliminated the requirements for businesses or lowered them as much as possible. At the same time, we have expanded the list of business activities that are eligible for refinancing benefits and for the refinancing programme in general. We hope this will allow businesses in the industries that have not been severely hit by the crisis yet, those not eligible for the loan repayment postponement programme, to restructure their loans, as well.
Next, a very important point. Our regional guaranteed credit funds are holding over 53 billion roubles, which means we have accumulated this much money in allocating subsidies to the regions every year. At the same time, a little over 90 billion roubles worth of sureties have been issued. We believe the regions should use the potential of regional guarantee programmes and microfinancing organisations to grant as many sureties to businesses as possible, because businesses will not only have problems with refinancing their loans, they will also face restrictions because they don’t have any collateral. In this respect, regional guarantees can really be a way out.
Next, insurance premium payments have been significantly decreased for all small and medium-sized businesses without exception. They have been cut in half, in fact, from 30 to 15 percent. This is the President’s initiative, which was formalised in a federal law and will help businesses gain almost 300 billion roubles.
Next, lease payments will be postponed. It has already been decided to provide a deferral on lease payments on federal property. It has also been recommended that the regions and municipalities introduce deferred lease payments for businesses. The Government has been given the right to regulate and adjust the mechanism to postpone payments under commercial contracts between leaseholders and tenants in the commercial sector as well.
These proposals are currently being discussed in the Government, and the decision will be made soon.
And last, if despite all this, companies are faced with a shortage of funds to pay wages and salaries, we have launched a zero-interest lending programme for payroll. Small and medium-sized businesses in the affected sectors may ask for and receive a loan in the amount of one minimum wage (plus social fees) for each company employee for six months, and the interest on such a loan will be paid from the federal budget. After the six-month period, the loan will carry 4 percent interest, actually the bank financing rate – it is the reduced rate offered by the Bank of Russia to commercial banks for these purposes. The total programme volume is 150 billion roubles. It will cover 1.5 million of the employed.
One more important thing. We have practically done away with the administrative burden – now business is free from audits. We are introducing a moratorium on penalties. Valid licenses will be automatically extended. It has been proposed to extend current licenses for a year. This concerns very many types of business. Everything must be done so that businesspeople can concentrate on business only, in some cases on saving their companies, and all contacts with administrative authorities must be reduced to a minimum. In addition, I should say that a moratorium on bankruptcy has also been imposed as well as a moratorium on suspending operations, especially by tax authorities. All these instructions, orders and decisions have been adopted and documented, so businesspeople must feel it.
Finally, we are monitoring closely the operation of our major, essential enterprises. It is equally important for us today to support small and medium-sized businesses as well as essential enterprises that are creating most jobs in the country and placing orders with small and medium-sized businesses, among other enterprises. We must ensure that all of them are doing well enough. This is the reason why we are stress-testing essential enterprises. The anti-crisis plan provides for allotting 500 billion roubles in government guarantees for them. If they face any problems in their operations, they will be able to take out loans backed by these guarantees. In addition to this, we are also looking closely at the performance of certain sectors and are adopting and implementing sectoral programmes, as was done in tourism. We are working out special measures for construction and some other industries.
To date, a great deal of decisions have been made within a very short time. The anti-crisis plan adopted a bit over three weeks ago is already 80 percent complete. However, adoption of federal laws and Government resolutions is, of course, not the end point. It is a necessary but insufficient condition. To make enterprises and companies feel this support, it is necessary that banks, regional administrations, microlenders and guarantee organisations all join these programmes and start implementing them as soon as possible. And this is the primary task now for all federal agencies and, above all, the Ministry of Economic Development. So, we are launching these programmes literally on a daily basis. For this reason, it is very important for us that the enterprises get a real response and real support from their banks and regional business support organisations they cooperate with. This is the number one task for all of us today, let me repeat it again.
Question: Will this proposed package of measures be supplemented and expanded? If so, based on what? And what are the cost estimates?
Maxim Reshetnikov: At this point, no package of measures can be considered to be sufficient, because the situation is evolving very quickly. We are receiving many proposals from the business community. The Ministry of Economic Development and other departments collect and generalise them. Based on these proposals, we are developing additional measures.
As for estimating the costs in this package of measures, the total estimate is 1.3 trillion roubles. Over 600 billion roubles of it in real money, 500 billion roubles is for guarantees, and a rather visible amount is loan restructuring in the regions, because supporting the regional budgets is also very important. And of course, this includes tax deferrals, I mentioned these numbers.
So, the package is large, but today all federal budget spending is basically based on anti-crisis costs. Why? Because, on one hand, we are making changes to many programmes and adjusting them to the current situation. I gave an example of that, under the Prime Minister’s instructions, we have already adjusted the existing programmes in support of small and medium businesses, totaling 18 billion roubles, to the current economic conditions – this is subsidised refinancing. And, once again, the maximum reduction of all requirements, etc. Moreover, we are now conducting a detailed analysis of all the expenses in the economy in order to maximally consolidate everything in these priority measures, the most effective ones, to enable enterprises to overcome this difficult time, while waiting for the economy to get back to normal or close to normal. This is the first thing.
Second. In general, all these federal budget expenditures are anti-crisis in nature because they create stable demand in the economy. Now our economy is facing a slump in exports due to the current situation. We also have domestic demand slump, we understand this. Therefore, the demand from budgets at all levels, primarily the federal budget, is currently very important so businesses can ultimately fulfill their orders and maintain jobs. So, the federal authorities were instructed to see to the need for the systematic contracting of all the programmes that are currently of importance. In particular, road repairs, construction sites and so on. That is, those programmes that have a great multiplier effect in the economy, that create and maintain the maximum number of jobs.
Question: Banks have already announced the terms for “anti-crisis” loans. It turns out that after six months there will be interest. How reasonable is this now, when the limits of the crisis are not yet clear?
Maxim Reshetnikov: We have two programmes. One programme is loan transfer: three transfers by one-third. Once again, interest payments for enterprises are reduced by two-thirds. One-third is undertaken by the banks, one-third is paid from the federal budget, and for the remaining one-third companies and entrepreneurs have a choice: pay it at this time, if they can, or if not, attach it to the body of the loan and start paying it back in six months. So, the level of payments is significantly reduced.
As for interest on loans for salaries, during the six months, while the grace period is in effect, it is zero percent, that is, interest is not accrued. And afterwards the interest rate will be 4 percent, which is significantly lower than the refinancing rate, so this is absolutely preferential interest. We agreed with the commercial banks that they would not earn interest on this programme. They will receive preferential money at 4 percent from the Bank of Russia, and the proposal is that companies will pay the same 4 percent after the six month grace period.