The Ministry of Finance proposes to maintain the budget for 2017-2019 the ability to borrow on international markets to $3 billion a year, reported July 5, Bloomberg with reference to the proposals of the Ministry, submitted to the government of the Russian Federation. Therefore, the Agency proposes to keep the volume of external borrowing at the same level, which is included in the budget for 2016. The representative Siluanov declined to comment .
Earlier in June, Anton Siluanov told journalists that the Finance Ministry does not plan to budget for 2017 external loans, but will be able to enter foreign markets.
“I think that not even going particularly to plan the access to foreign markets. Next year we will put plans to enter the domestic markets. But if there is a need for access to foreign markets, it can be done within the budget adjustments as usual in the fall or spring,” — said Siluanov (quoted by RIA “Novosti”).
In this year of the quota of $3 billion, the Finance Ministry only borrowed $1.75 billion, ending may 24, 2016, the placement of ten-year Eurobonds under 4.75% per annum. As reported a press-service Agency, investor demand for the bonds exceeded supply by several times and reached $7 billion, More than 70% of the securities bought by foreign investors. Placement of Eurobonds of the Russian Federation for $1.75 billion became the first sovereign deal in the international capital market in 2013. The placement was accompanied with difficulties because of the sanctions. In April, Euroclear and Clearstream refused to serve the new issue of Russian Eurobonds due to fears to violate the provisions of the US authorities and the EU. Investors will not be able to conduct settlements through Euroclear and Clearstream until they take the relevant decision, the Ministry of Finance indicated in the prospectus. As a result, the placement of Eurobonds passed through national settlement Depositary.
“Euroclear was provided unprecedented pressure,” he said in may, Finance Minister Anton Siluanov, adding that Russia continues to negotiate with the clearing systems on the early settlement.
After the placement of Eurobonds for $1.75 billion, the Minister said that the Ministry of Finance this year sees the needs of another output on the external debt market this year. The remaining loans for $1.25 billion provided for by the foreign borrowing programme for 2016, could be replaced by domestic ruble-denominated borrowings, said the Minister.
To Finance the deficit of the budget by domestic borrowing, as their services will be in rubles, which pays for the budget, explained Siluanov. At the St. Petersburg international economic forum, he said Russia is not interested in attracting foreign borrowing to Finance the deficit.
“We are, indeed, foreign currency borrowing is not necessary, we need rubles”, — he told, answering a question from the moderator about why the Finance Ministry has placed Eurobonds not $3 billion as planned, and only $1.75 billion External borrowing is an inflow of currency into the country. If we attract a considerable amount of currency, then this will affect the ruble, to its further strengthening”, — said Siluanov.
Moreover, according to the Minister of Finance, domestic borrowing in the next three years will inevitably increase. In accordance with the projections for the next three years, which leads Reuters with reference to the materials of the Ministry of Finance, net domestic borrowing will increase to 1.29 trillion rubles next year from 300 billion rubles in 2016, In 2018 or 2019, they will increase to 1.47 and 1.44 trillion, respectively.
“Even reducing the budget deficit we have to increase presence in the market, because the Reserve Fund should be protected, not spend reserves,” he said.
Reuters reports that the deficit of the Federal budget in 2017 will need to spend all accumulated in the Reserve Fund and approximately 783 billion rubles from the national welfare Fund. In 2018 and 2019, from the Fund to cover the deficit proposes to spend another 83 billion and 87 billion rubles. respectively.