Russian Minister of Economic Development and Trade Elvira Nabiullina
Photo: Dmitry Azarov
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2 Trillion in Govt. Money Heading into the Economy
At the session of the government today, Minister of Economic Development and Trade Elvira Nabiullina will propose that the state provide about 640 billion rubles of capital for the institutions of development, that is, the VEB Development Bank, Housing Utilities Reform Fund, the Russian Venture Co. and Rosnanotech, in the last two months of the year. The delay in providing that money will drive the necessary sum up to 660 billion rubles, the minister said. All told, over 2 trillion rubles of government money will enter the economy before the end of the year, representing an inflation threat greater than any faced by the Russian government yet.
The stabilization fund will be the source of 300 billion rubles of the funds to be allotted. That money is the proceeds of the sale of YUKOS assets and is currently in accounts at Gazprombank. The largest recipient of stabilization fund money will be the Development Bank (180 billion rubles). The government investment fund will receive 90 billion rubles on the condition that 15 billion rubles of that amount go to the Russian Venture Co. Rosnanotech will receive 30 billion rubles. In addition, the housing utilities reform fund will receive 240 billion rubes from the federal budget and Rosnanotech will receive 100 billion rubles from that source.
Government spending for the year through September totals 3.484 trillion rubles, or 83.8 percent of planned this year, worse than the 86 percent at the same time last year. The capital for the institutions of development may be used temporarily by the Central Bank to manage the liquidity crisis through repo mechanisms under new legislation. The swelling of the money mass will be felt in inflationary terms at the beginning of next year. Thus, there will be a spike in inflation just before the presidential elections, unless the government thinks up a way to avoid it now.
www.kommersant.com
All the Article in Russian as of Oct. 11, 2007
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