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Authorities Take a “Maternal” Approach
Posted on September 29th, 2009 Comments welcome Share/Save PrintLast week Russia’s Cabinet approved the draft 2010 budget. Prime Minister Putin promised to cut spending by government departments while also stressing social provisions, including “maternity capital.” Galina Khatiashvili, Intern, The PBN Company, Moscow, examines how the scheme to boost Russia’s population is being received.
When Russian parents have a second child, they are eligible for what is know as “maternity capital” - a benefit currently worth 312,162.50 rubles, or just under $10,000. Prime Minister Putin recently said that an estimated 300,000 families will receive 102 billion rubles next year as part of the scheme. But although it looks good at face value, its actual usefulness is limited, making it difficult for families to take advantage of the income boost.
Maternity capital can be claimed for three different purposes: to improve living conditions, to pay for education and to supplement a mother’s pension. To draw the benefit, families must justify the purpose through a complex and lengthy administrative process designed to help prevent fraud. And it can only be claimed as a credit to pay, for example, a building contractor, rather than be withdrawn as cash to use directly.
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Celebrating Another Victory: IMF Approves Second Loan Tranche for Ukraine
Posted on May 12th, 2009 Comments welcome Share/Save PrintBy Yulia Sobko, Financial Communications and Investor Relations Manager, The PBN Company, Kyiv
On the eve of Victory Day, the IMF gave the green light to disburse the second tranche of its loan to Ukraine. The second tranche totals $2.8 billion, bringing the IMF’s total loan to $7.3 billion to date.
Ukraine has had difficulties obtaining this second tranche. The original IMF loan agreement stipulated certain monetary and fiscal conditions to be met in time for the Q2 review for the second tranche, and many of those conditions became contentious domestic political issues. After some haggling over terms, the IMF has now met Ukraine part way, granting waivers on particularly controversial issues such as budget deficit and exchange rate, currency and import restrictions (which will now have to be removed promptly).
Under the revised terms, Ukraine is allowed a budget deficit of 4% of GDP in 2009, as opposed to the original requirement for a balanced budget, and the IMF has strongly recommended certain key structural reforms, including pension and tax reform. Ukraine’s National Bank has also committed to implement a flexible exchange rate policy and to discourage dollarization of the economy, which should mitigate the effect of external shocks on the economy and help focus monetary policy on inflation.
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Kazakh Government Tightens Its Belt
Posted on April 8th, 2009 Comments welcome Share/Save PrintLast week Prime Minister Karim Masimov announced a government hiring moratorium. 9,000 vacancies in the civil service will not be filled, and that there will be massive layoffs at state-owned Kazakh companies.
State holding Samruk-Kazyna will reduce staff by 50%, with further average pay cuts of 30%. Staff at Samruk subsidiary companies face 15% cuts in wages. Major companies affected include KazMunaiGas (London-listed oil and gas company), Air Astana (national airline), Kazakhstan Temir Zholy (railway monopoly), Kazpost (postal service) and Kazatomprom (nuclear power company).
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Putin’s First Annual Address to the State Duma
Posted on April 7th, 2009 1 comment Share/Save PrintYesterday Vladimir Putin delivered his first annual address to the Duma as Prime Minister.
Key Take-Aways
- 3 trillion ruble ($90 billion) aid package to ensure Russia survives a “very difficult 2009.”
- Inflation will soon begin to fall from the current annual rate of 14%.
- Tax burden should be kept low during the crisis.
- Government will reject calls to freeze electricity, gas and rail tariffs.
- Russian companies should take responsibility for reducing their own debt burden rather than relying on the state for bailouts ($174 billion of corporate debt had been repaid or restructured over the past few months).
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Ukrainian Consensus in the Offing?
Posted on March 12th, 2009 Comments welcome Share/Save PrintNegotiations continue over IMF conditions for releasing the second tranche of the country’s $16.4bn loan. Yesterday afternoon the IMF appeared to concede on its controversial demand that Kyiv have a balanced budget, allowing for a deficit of 1%+ provided it could be financed without substantially increasing inflation. Ukrainian News quoted First Deputy Finance Minister Ihor Umanskyi as saying that additional issues yet to be resolved involve legislation on excise duties and pensions, both of which have been sources of contention among Ukraine’s leadership. Prime Minister Yulia Timoshenko said that this progress paves the way for the IMF mission to return to Ukraine as early as next week. Read more »
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From $95 Oil to $41 Oil - Russia’s Revised Budget
Posted on February 26th, 2009 Comments welcome Share/Save PrintFinance Minister Alexei Kudrin previewed Russia’s revised 2009 budget yesterday. The original 2009 budget was based on an oil price of $95 per barrel and projects a surplus of 1.9 trillion rubles ($54 billion). The new budget is based on $41 oil and projects a deficit of 8% of GDP. Kudrin said that Russia’s Reserve Fund and National Welfare Fund will provide up to 2.7 trillion and 255 billion rubles, respectively, to help make up the deficit. Read more »
Worth a Thousand Words ...
