The visible hand of the market: how Russia will support manufacturers
The government together with the Central Bank is working out measures to support manufacturers in the conditions of high interest rates and tight monetary policy, Deputy Prime Minister Alexander Novak said. According to him, it is necessary to balance supply and demand, as well as to reduce the rate of inflation growth. This, in particular, requires "supporting the implementation of projects". Which industries are most in need of help and what they expect from the state - in the material "Izvestia".
System readjustment
The most relevant today are measures to form a supply economy, especially among small and medium-sized enterprises (SMEs), the press service of the Ministry of Economic Development told Izvestia.
"If we talk about the SME sector, it is important to ensure its qualitative growth, to fine-tune the regional support infrastructure - guarantee and microfinance organizations, "My Business" centers, industrial and technology parks - taking into account the current tasks," the ministry said.
A separate important direction is technological entrepreneurship. Here it is necessary to ensure the development of small technological companies, the Ministry of Economic Development said. We are talking about various grant support, tax benefits, programs of "growing up" under the requirements of large corporations.
In addition, the Ministry considers it important to focus on increasing labor productivity, the federal project of the same name is dedicated to this. The government's measures will be aimed precisely at increasing the efficiency of the economy - updating equipment, robotization and digitalization of enterprises.
"The federal project is structured according to three levels of work with labor productivity: factory (targeted work of experts at enterprises), sectoral (creation of sectoral centers of competence) and systemic (search and elimination of administrative barriers that hinder labor productivity growth, as well as training, including in online format, replication of accumulated experience)," the Ministry of Economic Development specified.
Pressure on companies
Now business is feeling the double effect of the tightening of DCP and macroprudential measures - deposits are attracted at a rate higher than the Central Bank, the spread in corporate loans has tripled, emphasized the expert on strategy and finance Pavel Tubin.
- First of all, the pressure falls on the companies that are not financed from the budget and do not participate in sectoral preferential lending programs," the expert explained to Izvestia.
According to him, while maintaining or, more likely, increasing the rate, it is necessary to pay attention to two directions:
- adjusting the NCL (short-term liquidity norm), so that the loan rates approached the key rate;
- reduction and support of the ruble exchange rate through regulations on the sale of foreign currency proceeds, as well as, perhaps, a tax on currency revaluation. Then it will work not as direct subsidies that create additional imbalances, but as a systemic tool during the period of high interest rates.
Against the backdrop of high funding costs, our economy faces the risk of shrinking production - companies with such expensive credit will be forced to reduce investment and production, which could further accelerate price increases. When the supply is lower with the same demand, prices are higher, said Mikhail Zeltser, stock market expert at BKS Investment World.
- Additional support is required in electronics, machinery and equipment production, automobile industry - these sectors have felt the negative impact of sanctions to a great extent," the expert emphasized in his conversation with Izvestia. According to him, import substitution efforts are being made there, and this requires substantial investments in development with the use of available credit.
It is impossible to single out companies that need more or less help from the state, Valery Tumin, a member of the expert council on the development of the digital economy at the State Duma Committee on Economic Policy, told Izvestia.
- The most effective way is preferential lending for business needs: a little help - and the business will cope on its own. The import substitution potential largely depends on this," the expert believes.
Among the companies that feel relatively well in the market, he notes those that work with the state defense order. Although the lending rates are the same for them, but these plants are provided with orders for months ahead, which means that the company is operating normally and can do without borrowed funds.
Large taxpayers (oil, gas, chemical industry) receive crediting on favorable terms, use loans from VEB.RF, diversify their business and can turn to the state for help at any time. Since the state budget replenishment largely depends on the export of these products, they are more stable, he said. But both of them would not refuse preferential loans, which can be used for modernization or expansion of production, opening new outlets or investments in R&D.
- But the economic superstructure suffers most of all from the inaccessibility of credit - enterprises that make life comfortable for people in cities, but do not have a significant impact on GDP and therefore become literally invisible to support measures, - said Valery Tumin.
These are farms, beauty salons, sports clubs, small clothing production, private kindergartens and after-school groups, as well as veterinary clinics. Particularly small outlets in dormitory areas of cities. These entrepreneurs, as a rule, do not qualify for preferential programs.
Formats of support
Taking into account the current economic situation, it is important for the effectiveness of support and at the same time to curb inflation that the measures should be calibrated and precise, Sergey Khudyakov, co-owner of the insurance broker Mainsgroup, told Izvestia.
First of all, support should be given not to the most needy industries, but to those that are critical for the country's livelihood and stable development of its economy: food production, agriculture, pharmaceuticals, energy, oil and gas sector, etc. The high-cost loans impose certain restrictions.
Expensive loans impose certain restrictions on the process of scientific development, Mikhail Glukhov, deputy general director of Valenta Farm, told Izvestia. Taking into account that this is a long and expensive research, there is a need for additional incentives for scientific activity.
First of all, cheap long-term loans for 10-20 years for the establishment of enterprises are needed, i.e., in fact, industrial mortgage, Stepan Zemtsov, Director of the Center of Economic Geography and Regionalistics of the Presidential Academy, added in a conversation with Izvestia. The amount of support depends on the specific applications of entrepreneurs. It is difficult to realize a successful project if there is no initiator and beneficiary.
Among the important tools to support investment activity is the project finance factory, which provides for long-term lending and hedging of interest risks, says Vladimir Yeremkin, a researcher at the IPEI RANEPA RANEPA's Structural Research Laboratory. Major decisions on the construction of mining and metallurgical, ore dressing plants, mineral fertilizer plants and some others have already been supported in this way.
- Within the framework of public-private partnership, projects are being developed in a wide range of areas - from the social sphere, including medicine and education, to industry and transportation. The ratio of budget and private funds, own and attracted, within the PPP contracts concluded today is one to three," the expert noted in a conversation with Izvestia.
One of the key difficulties, which is difficult for business to solve without government support, is transaction costs, Sergey Kolesnikov, co-owner and managing partner of Technonikol, told Izvestia.
- Friendly states are afraid to work with Russian business under the fear of imposing secondary sanctions. And sometimes, after we have spent enormous efforts to find a supplier of equipment, negotiate and build a logistics chain, we simply cannot pay for the product. And there is no solution to this problem yet. Every time we have to invent new ways to deliver payment," he pointed out.
It is time to stop the practice of blindly following the IMF recommendations, it is necessary to more actively implement measures aimed at financial support of the real sector, Artem Savostitsky, PhD in Economics, Deputy Head of the Department of Economic Policy and Economic Measurements of GUU, told Izvestia. This solution includes increasing the limits on financing projects with a high multiplier effect.
- In addition, it is important to continue to develop the system of strategic planning and create conditions for long-term investments in science-intensive and high-tech industries. At the same time, it is necessary to move more actively to the widespread practice of managed lending, where resources are allocated to priority projects that can ensure accelerated technological development of the economy and reduce dependence on raw material exports," the expert believes.
However, now it is unlikely that we are talking about new frontal programs for subsidizing interest rates, Dmitry Kulikov, director of the group of sovereign and regional ratings of ACRA, told Izvestia. It is probably assumed that state-owned companies and companies from strategic industries could locally close the emerging liquidity gaps.
