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According to the Russian Interior Ministry estimates, the average price for cigarettes will rise next year up to 220 rubles per pack. The Ministry has calculated the new cost of cigarettes considering the rise of excise duties on tobacco products expected next year.

At the last meeting of the outgoing year, held on 13–14 December, the US Federal Reserve System decided to raise the federal funds rate by 0.25 p.p., to 0.5–0.75% per annum. In addition, the Federal Reserve System announced the possibility of further rate tripling in 2017, which was a surprise to many economic agents.

After the key interest rate was raised dramatically and urgently to 17% per annum in December 2014, two months later (on 2 February 2015) the Central Bank of Russia started to lower it quickly (by 1.0 p.p.-2 p.p) though the headline inflation kept speeding up. The maximum was attained in March 2015 when consumer prices rose by 16.9% against the respective period of the previous year; the only exception was the indicators of January-February 2002.

The dynamics of lending by the banking sector to the economy have entered the area of positive values. It is to be noted that in October both retail and corporates segments of the portfolio increased.

The Government does not plan to introduce a draft law on introduction of the so-called “social parasitism tax” till the end of 2016. According to Maxim Topilin, Head of the Ministry of Labor, the text of the draft law does not exist yet.

In 2016, the Nobel Prize in the economics was awarded to the authors of the contract theory: Oliver Hart of the Harvard University and Bengt Holmstryom of the Massachusetts Institute of Technology. No doubt, these laureates deserve the prize as the outputs of their research are taught at all the universities within the frameworks of contract theory courses.

On Wednesday, 5 October 2016, the Kommersant daily published a number of provisions of the draft of the tax policy main measures in 2017-2019 period developed by the RF Ministry of Finance. According to the information provided by the newspaper, in the draft it is proposed to raise in 2017 the specific component of the excise on cigarettes from Rb 1,420 per 1000 cigarettes which provision is envisaged by the current version of Article 193 of the RF Tax Code to Rb 1,560 per 1000 cigarettes. Also, it is planned to maintain the rate of appreciation of tariffs on cigarettes at the level of 10% in 2018 and 2019, too.

The latest changes in the Russian regulation on undercapitalization¹ (namely, Article 269. 2-4 of the Tax Code of the Russian Federation) were introduced by Federal Law No.25-FZ of 15 February 2016 on “Amendment of Article 269 of Part 2 of the Tax Code of the RF as Regards Definition of Controlled Indebtedness” (hereinafter FL 25-FZ).

On Friday, 16 September, the Central Bank of Russia reduced the key rate by 50 b.p. to 10% per annum. So, the CBR has made a cautious step towards easing of the interest rate policy, having declared at the same time that it does not plan any further cuts in the interest rate till 2017.

In a letter addressed to the central bank, the Russian banking community has made a proposal that banks in some cases be allowed to request a credit check on customers without having to obtain their consent.

Introduction of new rules of calculation of the property tax on the basis of a cadastral value and not the BTI estimate may happen to be unfair.

In H1 2016, balance profit of the Russian banking sector amounted to Rb 360bn which is seven times as much than a year before (in H1 2015 the banking sector received only Rb 51bn worth of profits) and nearly twice as much than in the entire 2015 when the banking sector’s profits amounted to Rb 192bn.

Amidst budgetary constraints and the need to find new sources of income, Russian government is developing mechanisms to reduce the shadow economy and control officials’ large expenditures as well as expenditures of employees of state companies. However, as finance minister Anton Siluanov stated, they are not talking about controlling all citizens’ expenditures.

This spring, data on the System of indicators for the assessment of government-owned property management effectiveness were first published.

It is only occasionally that the strengthening of the territorial approach in the system of state governance in Russia is observed – for example, in the development and activities of specialized bodies, including ministries, carrying out state policy related to specific territories, or in the approval and implementation of strategies and government programs aimed at social and economic development of certain regions of the country.

From 1 August, 2016, the Bank of Russia increases reserve requirements for all types of credit institutions’ liabilities in roubles and foreign currency by 0.75 percentage points.