Agenda: additional allocations for promoting comprehensive development in rural areas, new approaches to financing environment protection initiatives, new rules for issuing infrastructure development loan guarantees, and reducing borrowing costs for SMEs.
Excerpts from the transcript:
The Government continues its work to make life better for people living in rural areas.
The President has emphasised the importance of these measures many times. Following the 25th St Petersburg International Economic Forum, he instructed us to allocate more funds for promoting comprehensive development in rural areas.
A directive has been signed to this effect. It provides for an improved quality of life in villages, rural settlements and towns and extending this initiative to six more regions: the Pskov, Rostov, Ryazan and Samara regions, as well as the Karachayevo-Circassian Republic and Yakutia. This effort will include building and upgrading water supply networks, cultural centres, kindergartens, schools and several other facilities, as well as buying the transport vehicles these regions need.
The Government will allocate almost 370 million roubles from the federal budget to this end. We will also carry on with these efforts in other regions of Russia so that people living in rural areas can access all the services they need.
Turning to environment protection, the Government has drafted a resolution introducing a new approach to funding these initiatives from the regional and local budgets.
All users of natural resources, as well as those who violate environmental regulations will contribute to financing the removal of accumulated environmental damage and restoring the natural environment through fines, lawsuits and voluntary indemnification. This way, the principle of making the polluter pay, as mentioned by the President, will materialise.
Once these payments make their way into regional or municipal budgets, they must be used on specific environment protection measures, focusing on dealing with the already existing issues, including unauthorised waste dumps and landfills.
In addition, regions will have the option of spending these funds on additional environment protection initiatives such as cleaning up water pollution, restoring or planting forests, environment monitoring and protecting natural reserves, as well as other measures.
We hope that earmarking these proceeds for environment-related activities will help regions adopt a more responsible attitude when dealing with the environment protection agenda and to take action more promptly when they need to phase out sites that are harmful to people.
The Government will expand its support measures for businesses. We have drafted guidelines for issuing loan and bond guarantees for infrastructure development projects.
Quite often, undertaking major projects in this sector comes at a high cost, while getting a return on this investment takes a long time. Government guarantees will cover half of the principal amount for a period of between 3 and 30 years.
We set the minimum amount for this kind of security at 2 billion roubles, while companies will have to finance at least 20 percent of the infrastructure project from their own funds.
Providing government support will help lower the risks for borrowers, as well as lenders, and make it more attractive to invest in development projects in key sectors of the national economy, including transport, construction, housing and utilities, energy, etc.
There is another document we have drafted. It is designed to lower borrowing costs for SMEs by merging two dedicated support programmes supervised by the Government, the Central Bank and the SME Corporation.
With the key interest rate at its current level, small businesses can take out loans for investment purposes at a rate of 4.5 percent during the grace period, and an average of 3 percent.
Today, we invited Minister of Economic Development Maxim Reshetnikov to join us at this meeting.
Mr Reshetnikov, I will ask you to share some details on the new rules. What is their expected effect? How has this sector been developing overall?
Maxim Reshetnikov: Mr Mishustin, colleagues.
Indeed, companies need to take out investment loans at an interest rate they can afford in order to adjust their manufacturing processes and promote import substitution. Thus, we suggest launching a pilot project to offer a new kind of loan. As you said, it will combine two tools: a subsidised interest rate as part of the national project to promote SMEs, and funding on preferential terms under a programme by the Bank of Russia and the SME Corporation to promote lending.
As a result, companies will be able to receive investment loans, for example, for buying equipment or carrying out major repairs at their manufacturing facilities, and launch new capacities within a 10-year horizon. They will have a five-year period during which they can benefit from a preferential interest rate. As you said, Mr Mishustin, medium-sized businesses will have an interest rate of 3 percent, while small and micro enterprises will pay a 4.5 percent interest rate, with the key interest rate what it is today.
These are the priority sectors for this programme: manufacturing, agricultural processing, logistics, and the hotel industry. These are the sectors which are currently proactive in adjusting their operations in the new environment.
This programme will total up to 50 billion roubles until the end of 2022.
Moreover, we also agreed that the SME Corporation assists business leaders in structuring their projects and applications and offer them advice on submitting the paperwork and on other matters so that we can launch this programme as soon as possible.
If you allow me, I would like to talk briefly about our other programmes.
The programme to subsidise interest rates under the national project on SMEs remains highly relevant. By fine-tuning it last year, we were able to provide better access to preferential loans for small and micro businesses last year. As a result, in the first seven months of 2022 there were 18,000 loans granted worth over 170 billion roubles, which exceeds the number of loans granted in 2021 by 3,000. In July 2022, the total value of loans for SMEs increased ten-fold compared to July 2021.
Moreover, the very structure of the lending portfolio is changing. As of the end of 2021, manufacturing and logistics accounted for about a quarter of the portfolio, but in 2022, 45 percent of funds went toward manufacturing and logistics.
There has been substantial momentum in developing the programme by the Central Bank and the SME Corporation to promote lending with 4,300 loans worth 88 billion roubles. Another important development came on 15 July when the Central Bank adopted two decisions: to lower the interest rate for borrowers to 11 percent, and to increase the limit under the programme by 100 billion roubles. Now there will be 270 billion roubles available through the programme. The decision to expand the programme enabled us to launch a new one without having to chip away at any of the existing undertakings.
I would like to thank the Central Bank’s executive team and personally Elvira Nabiullina for supporting these decisions.
The third programme that we have been promoting proactively consists of granting umbrella guarantees. Micro businesses were the primary beneficiaries, since they face the most challenges when it comes to obtaining guarantees against collateral. This way, the SME Corporation assumes risk under the granted loans or, to be more precise, it splits the risks with the banks. Thus, businesses received 15,000 loans worth 135 billion roubles this year.
Overall, Mr Mishustin, we introduced these tools for countering the crisis, and they are up and running. You instructed us to shift from crisis mitigation mode to long-term planning, and this is what we are doing: we are repackaging these initiatives as long-term instruments. This includes one of the proposals on today’s agenda. We drafted it together with the business community and discussed it with the regions. With this in mind, I am asking you, Mr Mishustin, to support this decision. As I said, we will launch it without delay.
Mikhail Mishustin: Mr Reshetnikov, the Government leverages a wide range of tools to generate growth for SMEs. We have built a portfolio of loans worth several hundred billion roubles under preferential lending programmes with government support, taking into account the restructuring of previously issued loans. It is essential that these funds produce maximum effect.
Your ministry and the regional teams must keep a close eye on the way the decisions to support businesses, adopted under instructions from the President, are carried out.
Overall, I think these tools are quite effective and will help businesses in these challenging times.