Page 55 - RusRPTNov18

Finance also planned to borrow $7bn on the foreign market, exchanging the old issue of Eurobonds for $4bn.
The sovereign Russian Direct Investment Fund (RDIF) is to set up a regional fund worth CNY5bn ($721mn) together with Chinese counterparts, the head of the fund Kirill Dmitriev told Tass on October 9, adding that first transactions in national currencies are expected in early 2019. "Moreover, the RDIF plans to set up similar funds with other countries in the future," he said as cited by Tass. RDIF's head stressed that cooperation in "national currencies is crucial for a successful development of trade and economic relations between the two countries".
Russia's Finance Ministry will cut the net domestic borrowing plan by RUB380bn ($5.7bn) in 2018 , Interfax said on October 9 citing the ministry's debt department head Konstantin Vishkovsky. Earlier in the year the Finance Ministry increased the net borrowings plan by RUB227bn to RUB1.04 trillion, but has now scaled it back to RUB564bn. In the fourth quarter of 2018 RUB310bn of borrowing in OFZ federal bonds placements is now planned. As analysed by bne IntelliNews, the US sanctions could potentially target Russia’s primary sovereign Eurobonds and its ruble denominated treasury domestic bonds. Under mounting sanction pressure in the second and third quarter the Finance Ministry completed less than 50% of OFZ placements offers. Last week on October 3 the ministry returned to the OFZ bond market after a four-week break , proposing two auctions of federal bonds maturing in 2021 and 2024 worth RUB10bn each. The placements saw little demand: only two thirds of the 2024 issue were placed at 8.29%, while the 2021 auction was called off due to lack of bids in the yield range proposed. This week on October 8 RUB5bn of OFZ bonds maturing in 2021 were proposed at an average yield of 8.28%, which was fully placed to a demand exceeding the supply four-fold. The ministry said ahead of the issue that it will only propose a limited amount "to monitor the sentiment of market participants." Previously the Finance Minister Anton Siluanov said that OFZ will not be placed at unfavourable market conditions, especially given the comfortable fiscal position. Russia's federal budget surplus in January-August 2018 amounted to RUB1.96 trillion ($28bn) or 3.1% of GDP, up from RUB1.38 trillion of 2.5% of GDP as of end of July. Although federal spending seasonally peaks in November-December, the Finance Ministry is close to recording the first budget surplus for the whole year since 2011 on high oil and gas revenues. The budget was initially drafted at $43.8 per barrel oil price and 1.3% of GDP deficit, but oil prices this year have been almost double the estimate. In January-June Urals blend oil price averaged $69.73. Previously in May the ministry already suggested that the surplus in 2018 could be in the range of 0.5% to 2% of GDP.
6.1.2 Budget dynamics - regions
Duma committee proposes regional development budgets. The Duma Committee on Federalism and Local Government proposed that regional governments create "development budgets" directed towards infrastructure and long-term projects.
The proposal has Kudrin's fingerprints on it, since an Audit Chamber report discovered that the regions were (shockingly) underspending on socio-economic development.
55 RUSSIA Country Report November 2018 www.intellinews.com