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2014-09-22 18:10:00

RUSSIA WILL USE $7.8 BLN

RUSSIA WILL USE $7.8 BLN

Russia may prop up energy companies Rosneft and Novatek with up to $3.9 billion each from its National Wealth Fund, a reserve of oil proceeds set up to buoy the country's pension system.

Russia's government has promised to support those companies which, under EU and U.S. sanctions over Ukraine, are unable to access Western markets. Rosneft and Novatek, both run by allies of President Vladimir Putin, have signaled they will need help, with Rosneft asking for $40 billion.

Finance Minister Anton Siluanov was quoted by Itar-Tass news agency as saying the government was considering a proposal by the two companies for the wealth fund to invest 80 to 150 billion rubles in their bonds.

"We are considering the proposals ... I think that in this year we will be able to take such decisions," he said, adding that the proposals were for investment of up to 150 billion rubles in each company, Tass reported.

But Economy Minister Alexei Ulyukayev was quoted as saying by Interfax news agency that the two companies had yet to make formal requests, meaning it would be difficult for them to receive the help by the end of the year.

The government has so far avoided pushing the country into debt, instead planning on using reserves - including those set aside for Russia's 40 million pensioners - to support what Putin calls the country's "national champions", pillars of the economy in sectors such as energy and defense.

The National Wealth Fund was set up to support the pension system, which will be stretched in the future as the population ages and the working population shrinks. Using these funds has raised concerns that Russia is robbing the future to pay for today.

Russian officials are increasingly split over how to boost companies and an economy that is teetering on the brink of recession due to the sanctions imposed on its leading state companies and banks over Moscow's role in the Ukraine crisis.

The budget for 2015 to 2017 relies on high oil prices to cover social spending promises and offers little to those who want to see investment in companies to try to kick-start an economy expected to grow only 0.5 percent this year.

Rosneft, led by Igor Sechin, a long-time ally of Putin, has grown rapidly since it took over most of the assets from Yukos in the mid-2000s, and acquired rival TNK-BP last year, amassing large debts.

It will need to repay $26.2 billion between July this year and December 2015, with peak repayments of $9.4 billion in the fourth quarter this year and $11.8 billion in the first quarter next year, Moody's rating agency said in a July note.

Novatek, co-owned by Gennady Timchenko, another Putin ally, has good liquidity, with only a $350 million syndicated loan maturing within the next 18 months, according to Moody's.

However, Timchenko has admitted that the sanctions have deterred financing from European as well as U.S. banks - complicating investment projects such as its flagship $27 billion Yamal liquefied natural gas project in the Arctic.

reuters.com

Tags: RUSSIA, ROSNEFT, NOVATEK, OIL, GAS, SANCTIONS

Chronicle:

RUSSIA WILL USE $7.8 BLN
2018, June, 18, 14:00:00

U.S. IS BETTER

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RUSSIA WILL USE $7.8 BLN
2018, June, 18, 13:55:00

U.S. ECONOMY UP

IMF - The near-term outlook for the U.S. economy is one of strong growth and job creation. Unemployment is already near levels not seen since the late 1960s and growth is set to accelerate, aided by a near-term fiscal stimulus, a welcome recovery of private investment, and supportive financial conditions. These positive outturns have supported, and been reinforced by, a favorable external environment with a broad-based pick up in global activity. Next year, the U.S. economy is expected to mark the longest expansion in its recorded history. The balance of evidence suggests that the U.S. economy is beyond full employment.

RUSSIA WILL USE $7.8 BLN
2018, June, 18, 13:50:00

U.S. INDUSTRIAL PRODUCTION DOWN 0.1%

U.S. FRB - Industrial production edged down 0.1 percent in May after rising 0.9 percent in April. Manufacturing production fell 0.7 percent in May, largely because truck assemblies were disrupted by a major fire at a parts supplier. Excluding motor vehicles and parts, factory output moved down 0.2 percent. The index for mining rose 1.8 percent, its fourth consecutive month of growth; the output of utilities moved up 1.1 percent. At 107.3 percent of its 2012 average, total industrial production was 3.5 percent higher in May than it was a year earlier. Capacity utilization for the industrial sector decreased 0.2 percentage point in May to 77.9 percent, a rate that is 1.9 percentage points below its long-run (1972–2017) average.

RUSSIA WILL USE $7.8 BLN
2018, June, 18, 13:45:00

SOUTH AFRICA: NO BENEFITS

IMF - South Africa’s potential is significant, yet growth over the past five years has not benefitted from the global recovery. The economy is globally positioned, sophisticated, and diversified, and several sectors—agribusiness, mining, manufacturing, and services—have capacity for expansion. Combined with strong institutions and a young workforce, opportunities are vast. However, several constraints have held growth back. Policy uncertainty and a regulatory environment not conducive to private investment have resulted in GDP growth rates that have not kept up with those of population growth, reducing income per capita, and hurting disproportionately the poor.

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