State Duma Gives First Reading Approval to New Legislation on Subscribed Capital for VEB.RF and Other Development Institutions
A plenary session of the State Duma passed new legislation to allocate public budget funds to VEB.RF, Russian Small and Medium Business Corporation and Russian Export Center for their subscribed capital.
The relevant amendments to the federal law on the development bank and to the Budget Code had previously been approved by the specialist committees of the lower house of the Russian parliament on 8 November 2018. In addition, the changes to legislation introduce the role of VEB.RF as a coordinator of development institutions. For this purpose, VEB will participate in managing development institutions and formulate procedures for joint work on projects in order to ensure that instruments of support will be used in an integrated manner.
The draft legislation also concerns the name of Vnesheconombank; the renamed institution will become State Development Corporation VEB.RF. The new name reflects the role of VEB in carrying out the tasks assigned by the Russian President and the Russian Government.
Earlier today, the State Duma gave first reading approval to amendments to the 2018 federal budget, allocating an additional 20.45 billion roubles to VEB.RF for the settlement of its external debt.
VEB.RF Chairman Igor Shuvalov took part in discussions at the Dubai summit of the Global Future Council on Russia. The participants discussed various aspects of global economic development, including the role of cities as centres of international cooperation and technological partnership.
Igor Shuvalov said: “Municipal economy projects produce many positive effects. The service sector is growing, while small and medium-sized businesses have an increasing share of the market. Cultural and social trends are changing. A more successful city attracts better professionals. Cities today make a substantial contribution to the country’s GDP. They help to create a competitive advantage for people.”
According to Igor Shuvalov, urban policy should be formulated and implemented at national level. This makes it necessary to understand which cities are growing, how and why. VEB.RF should ensure the coordination of development institutions’ involvement in the implementation of national projects, including aspects of city development.
VEB, DOM.RF and Russian Small and Medium Business Corporation are working in partnership with Strelka KB and Moscow School of Management SKOLKOVO to develop tools for supporting municipal economy projects. There are 1,114 towns and cities in Russia. Urban dwellers make up 74% of the country’s population.
Igor Shuvalov also attended a joint meeting of the Global Future Councils on Russia and Europe.
Vnesheconombank issued short-term bonds in additional placements to companies and corporations on 7 and 8 November 2018.
The Bank raised 28 billion roubles, including 20 billion roubles from bonds with a maturity of 14 days and a coupon of 7.22% p.a. and 8 billion roubles from bonds with a maturity of 21 days and a coupon of 7.27% p.a.
The par value of one bond is 1,000 roubles. The bonds were sold at 100% of their par value. The coupon is payable at maturity.
The arrangers of the bond issue are Gazprombank and Svyaz-Bank.
The bonds are on the Moscow Exchange’s Quotation List Level 1. The depository is National Settlement Depository.
State Duma Committees Agree to New Legislation on VEB.RF’s Coordination of Development Institutions
The Budget and Taxes Committee and the Financial Market Committee of the State Duma supported new legislation clarifying the functions of VEB.RF. The committees recommended that the Council of the State Duma should introduce it for its first reading in the lower house.
The Russian Government introduced two bills to the State Duma on 31 October 2018, amending the Budget Code, the Law “On Bank for Development” and other laws that regulate the activities of Russian Export Center and Russian Small and Medium Business Corporation.
It is proposed that the budget legislation should include a new mechanism, namely the approved amount of authorised capital. This is the portion of authorised capital that, as resolved by the government, will be allocated to a development institution for new projects.
VEB is assigned the role of a coordinator of development institutions (as resolved by the Russian Government). For this purpose, VEB will participate in managing development institutions and formulate procedures for joint work on projects in order to ensure that instruments of support will be used in an integrated manner.
The draft legislation also concerns the name of Vnesheconombank; the renamed institution will become State Development Corporation VEB.RF. The new name reflects the role of VEB and its tasks assigned by the Russian President and the Russian Government.
The Monotowns Development Fund (MDF) has lent 1 billion roubles to Hevel for an investment project in the single-industry town of Novocheboksarsk, Chuvash Republic. The funds were loaned for eight years at a rate of 5% p.a. In July 2018, the Supervisory Board approved MDF’s financial participation in the project designed to increase the production line annual capacity to 250 MW using Hevel’s Novocheboksarsk-based production facilities. The total project value is 2.8 billion roubles.
Along with MDF, the project is financed by the Industry Development Fund. The project is expected to increase the output of solar modules for the growing domestic market and for the export of finished products. The project will create 90 new jobs. The technology introduced by the Project (renewable energy sources) is on Russia’s critical technology list in compliance with Decree No. 899 of 7 July 2011 ‘On the Approval of Priorities in the Development of Science, Technology and Engineering in the Russian Federation and of the Critical Technology List of the Russian Federation.’
The Monotowns Development Fund is a not-for-profit organisation established by Vnesheconombank in October 2014. The Fund’s objective is to create an environment for new jobs other than with major local employers and to attract investment in single-industry towns through infrastructure and investment projects. The Fund co-finances expenses incurred by Russian constituent entities and municipalities when constructing and rehabilitating infrastructure facilities required for new investment projects, finances investment projects, performs the functions of a project office to develop single-industry towns and organises project management teams to improve the social, demographic and economic status of single-industry towns. The Fund operates in strict compliance with the regulations on the federal budget subsidies as approved by the Russian Government’s Resolution No. 1186 of 11 November 2014.