Comments

Credit pumping as part of the growth model and institutional environment which have been established in Russia, will lead to a short-term revival of the economy, escalation of structural problems, and a crisis which would cost much more than the crisis of 2008-2009.

According to the Ministry of Economic Development and Trade of Russia, GDP grew up to 2.6% in annual terms in April 2013 against 2% in March in Russia, as stated Andrei Klepach, Deputy Minister of Economic Development, on May 27. GDP increased 1.8% year on year in January thru April in 2013.

According to the Federal Treasury, federal budget revenues amounted to Rb 4223.4bn, or 20.9% of GDP in January thru April 2013, showing a decline of 2.2 p.p. of GDP year on year.

On 23 May, RF First Deputy Prime Minister Igor Shuvalov stated that he saw no reasons for Russia's sovereign rating to be revised this year. He also said that ‘a recession so far has posed no threat to the Russian economy ... There is neither crisis nor recession; simply, given the current price of oil, the current rate of economic growth does not satisfy us'.

Last week, Boris Titov, the ombudsmen for the protection of business people's rights, submitted to the State Duma his initiative to free more than 111,000 entrepreneurs convicted of economic crimes. He suggested that the implementation of the initiative should coincide with Entrepreneur's Day on 26 May.

In the middle of last year, Russia's financial sector registered a record high growth rate of the amount of outstanding debt against loans granted to individuals.

The RF Ministry of Finance is going to revise upwards its budget deficit projection for 2014 due to the expected loss of revenue in the amount of Rb 650 bn. In April, the RF Ministry of Economic Development downgraded its previous economic growth rate projection for Russia's economy in 2014 fr om 4.3% to 3.7%.

The RF Government has vetoed the RF Ministry of Finance's proposal that the excise duties for Euro-4 and Euro-5 standard gasoline should be massively increased in the next few years. If the proposal had been approved, three years from now the price of one liter of Euro-4 and Euro-5 gasoline would have been around 5 rubles higher than it is at present. The Government wants gasoline prices to increase at a much more moderate pace.

On May 15, the Bank of Russia made a decision to keep intact its refinancing rate and interest rates on liquidity-absorbing operations and short-term liquidity-providing operations.

Experts of the Development Center under the Higher School of Economics have acknowledged the onset of technical recession for the Russian economy.

In early April 2013, a new draft law was submitted for consideration by the State Duma Committee on Budget and Taxes. The draft law is designed to introduce changes in the current procedure for imposing tax on the dividends of individuals - tax residents of the Russian Federation, and on the dividends of Russian organizations. If the bill is passed into law, incomes (or profits) in the form of dividends will be taxed at a rate increased to 13%.

The Central Bank of Russia published the first issue of its "Money Market Review" on May 7. We believe that such a review will enhance transparency of the money market and the Bank of Russia monetary policy in general. According to the Central Bank's press release, the better informed are market participants of market structure and trends, the more adequate is their assessment of risks they are exposed to, above all, liquidity risk.

Comments to the "Harvest will prevent recession" article (Banki.ru, 30.04.2013).

The audit by the Accounts Chamber of the Russian Federation¹ at ROSNANO OJSC led to a great deal of articles and news releases in mass media about alleged large-scale violations revealed during the audit.

Pursuant to the Russian Government's draft amendments to the draft federal law No. 51763-4 "On the Amendments to the Second Part of the Tax Code of the Russian Federation and Certain Legal Acts of the Russian Federation", which was posted on the ‘Official Information' page of the Ministry of Finance of Russia official website on 23.04.2013 , a immovable property tax (hereinafter the "immovable property tax") is to be introduced in the Russian Federation prior to January 1, 2018.

The contents of the privatization process in the Russian economy in 2012 was governed by a forecast plan (program) of federal property privatization and the federal property privatization guidelines for a period of 2011-2013 adopted late in November 2010.