Russian government to add 2 trillion roubles to banking system

Mar 6th, 2009 | By | Category: Rouble News

In a further bid to stave off the deepening financial crisis, story in its revised budget, the Russian government has pledged to inject 2 trillion roubles into the banking system and into social programmes.

The social sector will be the greatest beneficiary, set to receive 370 billion roubles, with pensions receiving the lion’s share.

Regions are to receive 300 billion roubles, and industries such as agriculture, railways and defence will find themselves 350 billion roubles better off.

A further 500 billion will be invested in the banking sector to try to offset bad corporate debt. VTB is expected to receive 200 billion roubles, while VEB and subordinate loans will each receive 100 billion in loans.

The new budget will result in a deficit of 8% of GDP, mainly from the fall in the predicted income from oil, due to falling prices. However, the deficit will be covered with the US$136 billion National Reserve Fund.

Under the current plans, the defecit is expected to fall to 5% of GDP by 2010 and to 3% by 2011.

The government has also announced that restrictions will be put on what research fund money can be invested in. It can no longer be invested in foreign government agencies’ or central banks’ bonds and can not go into foreign bank deposits.

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