Page 24 - RUSRptSept18

adjustment. Analysts at Sberbank, Russia's largest bank, already suggested that at the next policy meeting the CBR could go out of its way and increase the key interest rate instead of the expected flat decision as sanctions add to the volatility from Turkey, and other emerging markets.
Moody’s says effect of recent sanctions will be limited. A new Moody’s report says the US sanctions imposed on Russia on AUgust 27 in response to the Skripal poisoning will have little effect the economy. New sanctions to come in the fall, however, could aggravate the structural limitations of Russian growth and lead to problems with bank financing. The Skripal sanctions are largely symbolic. Moody’s analysts expect sanctions imposed by the Trump administration to be less severe than those prepared by Congress.
Presidential aide Andrei Belousov announced that Russia’s leading companies have agreed to contribute RUB200bn-RUB300bn to investment projects over the next six years . Previously Belousov controversially proposed to slap a one-time selective tax on "extra revenues" of Russia's largest metals and chemical majors worth up to RUB500bn. The statement was made following a meeting with Finance Minister Anton Siluanov and representatives of the 14 metals, mining, and chemical companies on August 24, Belousov said he did not see the sense in raising taxes, but did get the companies to promise to making investments. The idea caused a strong negative reaction on the markets and was opposed by the government, but evolved into a pretext to mobilise the capex of the companies for Vladimir Putin's six-year RUB8 trillion spending spree. The potential investment is estimated at RUB200bn-300bn or 40-60% of the additional revenues previously planned to be collected by raising taxes. Reportedly the core areas for investment by the companies will be infrastructure, environmental protection, digitalisation and development of new technologies. A working group will be set up by September to develop a mechanism by which businesses will participate in the projects. "Given that core M&M and chemical companies are now expected to invest around $4.0-4.5bn over the next six years collectively, the burden should be bearable and will hardly impact FCF generation and their ability to pay dividends," Sberbank CIB commented on August 27. Previous proposal by Belousov "could have resulted in a severe EBITDA cut, a reduction of capex budgets and dividend yields, as well as a $40bn contraction of the sector’s market capitalisation," on Aton Equity numbers.
The European Union has extended the Russian sanctions on six companies involved in the construction of the 19km Kerch Strait bridge to the annexed Crimea peninsula, confirming previous reports that EU ambassadors were consider more sanctions of companies affiliated with the bridge. Only two months ago, Russia's President Vladimir Putin inaugurated the newly built Kerch Strait by driving a truck over the $4bn bridge. The controversial bridge became Europe’s longest and provides direct access to Russia’s mainland, bypassing the previous land route that required driving through Ukrainian territory. Among the sanctioned entities are Stroygazmontazh and Mostotrest , owned by stoligarch Arkady Rotenberg , a personal friend of Putin’s who has become a billionaire thanks to the number of big state orders awarded to firms under his control. Both companies have been already sanctioned by the US. Other companies sanctioned by the EU over Kerch bridge include Tavrida, Zaliv, Most, and Gipstroymost.
Small parties will reach legal expiration date in 2018-19 . According to a 2012 law, parties must compete in a minimum number of elections every seven years in order to maintain their registration. Strict regulations make advancing candidates almost impossible for non-systemic parties, however. A recent report now says time is up for many small parties. The regime needs to keep competitors out of the running, but it also likes a fractured party system that enables it to dominate legislatures. The forced de-registration of small parties could upset that balance, so watch out for electoral reform in the next
24 RUSSIA Country Report September 2018 www.intellinews.com