State Development Corporation VEB.RF has issued surety bonds to commercial banks for more than 100 billion roubles under a new programme to support businesses. VEB.RF’s total limit under the programme is 131 billion roubles.
What is the purpose?
The Russian Government launched a new low-interest lending programme to provide businesses with 3% loans, with VEB.RF issuing surety bonds to commercial banks.
“VEB.RF has already issued surety bonds for low-interest loans to as many as 17 banks, including regional credit institutions. Our surety bonds will secure the performance of the borrowers’ debt obligations and guarantee that up to 75% will be repaid in principal and interest,” said Daniil Algulyan, Deputy Chairman, VEB.RF.
VEB.RF has already been involved with similar programmes. Since the beginning of the pandemic, VEB.RF has issued surety bonds totalling 500 billion roubles to 40 banks under the first two rescue schemes for ailing businesses.
What are the results?
The start date for loan applications under the new programme was 9 March 2021. The banks now have over 9,000 loan agreements totalling 27.3 billion roubles. Loans are accessible to micro, small, and large businesses working in tourism, sport, entertainment, leisure and hospitality. The loan amount depends on the number of employees. The ceiling is 500 million roubles for 12 months.
How long will the programme last?
Applications can be submitted from 9 March to 1 July.
VEB.RF’s Supervisory Board Considers Approaches for Group’s Strategy and Several High-Priority Projects
Dmitry Grigorenko, Deputy Prime Minister and Chief of Staff of the Government Executive Office of the Russian Federation, presided at a meeting of VEB.RF’s Supervisory Board.
As specified in the road map for reforming the development institutions, VEB.RF is to submit the Group’s updated strategy by 1 July. In this connection, the Supervisory Board considered and approved the main areas of VEB.RF’s activities to be included in the new strategy.
The Supervisory Board decided that VEB.RF’s priorities would include maximising the Group’s contribution to attaining national development goals. Therefore, VEB.RF should act as an integrator of priority projects and set up a customer-centric business support system offering standardised products and services and making it possible to ensure the scalability of integrated development programmes and remove the risks of economic cycles or complex project stages.
Dmitry Grigorenko, Deputy Prime Minister and Chief of Staff of the Government Executive Office of the Russian Federation, Chairman of VEB.RF’s Supervisory Board, said during the meeting:
“The Supervisory Board discussed the main areas of the VEB.RF Group’s new strategy. The development institutions’ priority is now the consolidation of public and private investment resources to achieve a breakthrough in the country’s development and to ensure adequate living conditions and improve quality of life for people. The Government’s frontline strategy includes considerable investments in the country’s economy, and VEB.RF is becoming a tool for obtaining these investments. The VEB.RF Group is a key partner of the Government and business, providing comprehensive support for the priority areas of economic development.
“In addition to its current activities, VEB.RF was given four new strategic areas. These are investments in major projects within the Government’s frontline strategies. Support for projects to improve competitiveness, export-oriented projects and projects aimed at creating super-industries for a technological breakthrough. Third, projects of regional significance, including public-private partnership projects. VEB.RF is becoming a driver of tomorrow’s infrastructural projects aimed at developing urban agglomerations.”
Igor Shuvalov, Chairman, VEB.RF, said:
“The Supervisory Board discussed what VEB.RF should be like after the development institutions have been reformed. VEB.RF is ready to take on more ambitious tasks and participate actively in the implementation of the Government’s frontline strategies.
“VEB.RF’s new business model will allow us, if we have adequate capital and liquidity, to implement investment projects for 10 trillion roubles by the end of 2025.”
Additionally, the Supervisory Board considered several issues related to obtaining additional liquidity to finance VEB.RF investment projects as well as corporate issues.
The Supervisory Board also discussed the possibility of carrying out a pilot project to modernise the Taganrog tram system. The concession project involves the replacement of 45 kilometres of tracks and 60 electric trams. The project will make it possible to provide high-quality and full public transport services and attract new tourists to Taganrog. In addition, the project can become Russia’s first concession covering the entire tram system of a city.
The winners of the WorldSkills student competition in the category “Urban Studies: Town Planning” were able to attend lectures under the training programme of VEB.RF and Moscow School of Management SKOLKOVO for management teams in the 100 largest Russian cities. Students at Kosygin Russian State University (RSU) were provided with this opportunity following the vocational skills competition that was hosted by the university in late March. Russia’s first category was organised by the Housing and Utilities Reform Fund with support from VEB.RF.
The WorldSkills competition took place at RSU in late March. It was not easy for students of the Environmental Design Department to win: they had only three days to prepare their projects. Their competition task was to develop a project for the integrated development of the forest park in the Mikrogorod housing estate, which is managed by New Urban Projects (part of the VEB.RF Group).
The competition winners were invited to attend lectures at SKOLKOVO about the development of creative industries together with management teams from the 100 largest Russian cities. The programme is intended for city managers and their key assistants. This is a unique programme as it focuses on practical matters and uses a comprehensive approach.
“It’s great we were able to hear how some problem or other will be resolved in the development of creative industries in the future. We’ve learnt a lot of interesting things, and it will definitely come in handy in our work,” RSU student Maria Bystritskaya said.
The speakers were Russian and foreign experts: Matthias Rauch, Cultural Innovation Officer and Head of the Cultural Urban Development Department, Mannheim, Germany; Denis Shchukin, Director, Creative Practices Foundation; Polina Kuzavlyova, Head of the Department of Special Projects, Studies and Consulting, Universal University; Dmitry Tyutkov, Co-founder and Creative Director, TUTKOVBUDKOV; Mark Zavadskiy, CEO, Riki Group. The students were shown Moscow School of Management SKOLKOVO and its campus.
“The students got a unique opportunity to immerse themselves in a professional environment and learn more about the development of creative industries. The lectures and the tour of our campus were very inspiring for them, and I’m sure this will give powerful impetus to their further development in the area of urban studies. Thank you for this opportunity,” said Tatiana Kulikova, Deputy Director, Institute of Design, Kosygin Russian State University.
For information: VEB.RF launched the training programme for the 100 largest Russian cities last summer. The programme consists of 14 modules in five categories. Built on the Master of Public Administration (MPA) standard, the programme was prepared by VEB.RF and Moscow School of Management SKOLKOVO in partnership with Strelka Institute for Media, Architecture, and Design; the Higher School of Economics; and the New Economic School.
VEB.RF, Interros and Vasta Discovery Agree to Create New Mountain Resort in Sochi
- Total investment in the project is estimated at 80 billion roubles
- VEB.RF is considering syndicated lending for the project
VEB.RF, Interros and Vasta Discovery have agreed to cooperate in carrying out the project to create Dolina Vasta, an all-season mountain resort in Sochi.
The agreement was signed by Alexander Tarabrin, Head of Property Project Management and Asset Management and member of the Board, VEB.RF; Sergey Batekhin, CEO, Interros; and Sergey Bachin, CEO, Vasta Discovery.
The agreement is aimed at developing post-Olympic Sochi and regional tourism and building the necessary infrastructure to increase the domestic and inbound tourist flow. Ultimately, this work will contribute to the socio-economic development of the Krasnodar Territory and the city of Sochi as a mountain resort.
It is intended that the Dolina Vasta project in Sochi will build the necessary tourist infrastructure for health and ski recreation in the next four years (2021–2025). A comfortable environment will be created in Sochi National Park for year-round recreational activities, with balneotherapy and ski centres. The balneotherapy centre will include a sanatorium, guest houses and spa hotels, and a hydropathic facility with mineral water pump-rooms. The skiing facilities will consist of 80 kilometres of slopes and several ski lifts with a total length of 13 kilometres.
The project initiators estimate the total investment in Dolina Vasta at 80 billion roubles. The intend to use internal funds and borrowings, and the project’s utility and transport infrastructure will be built using public funding.
The new high-class resort, such as Dolina Vasta, in the mountain cluster of Sochi will create 2,500 jobs (or, including related services, as many as 5,000), stimulate small and medium-sized enterprises, and contribute to the socio-economic and cultural development of the region. The resort will pay billions of roubles in taxes at various levels in the future. The tourist flow is estimated at 1,500,000 guests per year.
VEB.RF is considering its participation in organising and conducting due diligence for the Dolina Vasta project, providing investment and financial advice during its implementation, and arranging a syndicated loan for the project (under the Project Financing Factory programme). Interros acts as an investor to arrange financing for the project. The project is implemented by Vasta Discovery, responsible for preparing design and estimate documents, obtaining ownership, operating the project’s facilities, as well as acting as a co-investor and raising funds.
Alexander Tarabrin, Head of Property Project Management and Asset Management and member of the Board, VEB.RF:
“Domestic tourism is an industry that can make a significant contribution to post-pandemic economic recovery. Projects in this area help to make qualitative changes to the urban environment and create incentives for small and medium-sized enterprises. That is why VEB.RF views the tourism and hospitality industries as one of the most promising areas of investment.”
Sergey Batekhin, CEO, Interros:
“The successful experience of Sochi mountain resorts clearly shows the growing demand among Russians for recreational activities within the country. This became especially true during the pandemic. The new year-round resort Dolina Vasta not only will make such recreation more accessible to Russians, but also will meet the growing demand. As the project’s investor, Interros intends to use its experience of creating the Rosa Khutor resort and will ensure that Dolina Vasta construction will meet highest engineering and environmental standards.”
Sergey Bachin, CEO, Vasta Discovery:
“The Dolina Vasta spa resort will become part of the post-Olympic development of Rosa Khutor and will perfectly complement the existing infrastructure of the Sochi mountain cluster. This will substantially expand the tourism opportunities of the Krasnodar Territory as a whole as the most attractive place for recreation in this country. I’d like to emphasise the construction of the new resort will be based on the corporate Green Code, formulated in accordance with Russian and international standards. Respect for the region’s unique natural environment has always been high on our list of priorities.”
Igor Shuvalov Interviewed on RBC: ‘New Principles Should Underlie a Post-Pandemic Economy’
According to the IMF, the COVID-19 pandemic may cost the world economy an estimated 28 trillion US dollars in 2020. And this figure will undoubtedly be even higher in 2021. No economy in the world, including BRICS, was able to avoid losses. GDP shrank in all countries except China at year-end.
But the fall could have been much deeper if the BRICS governments had failed to take prompt crisis-fighting measures. The five countries’ development banks, united in the BRICS Inter-Bank Cooperation Mechanism (ICM), provided assistance with the rescue schemes. The development banks acted as operators of the governmental rescue programmes, providing businesses with low-interest loans, helping commercial banks to restructure bad debts.
Of course, each country chose its own measures to fight the crisis. As part of the 2020 rescue package, VEB.RF issued surety bonds totalling 500.4 billion roubles (6.7 billion US dollars) to commercial banks. The BRICS economies received help from the New Development Bank (NDB). The BRICS members are to receive a total of 10 billion US dollars to fight against the pandemic and cope with its repercussions.
But the goal of the BRICS development institutions is not limited to minimise the economic consequences of the pandemic. It is necessary to provide impetus for sustainable and inclusive development rather than just reclaim the percentages of GDP lost during the pandemic. And our activities in 2020 show that together we can do much more.
The BRICS development institutions should strengthen the coordination of investment policies and the exchange of experience. That is why it is necessary to focus on several key areas. Most notably this is cooperation in healthcare, in developing smart cities and new urban technologies, as well introducing the principles of a green economy and responsible financing.
Firstly, with support from the NDB, the ICM members could help to set up a BRICS medical centre of excellence designed to assess current health risks in the member countries. The centre could regularly collect and publish research and test results, facilitating the exchange of experience and enhancing coordination in the area of vaccination and immunisation among the BRICS national ministries and agencies responsible for emergency management, environmental and natural protection and public health.
The centre would also help to accelerate the BRICS certification and distribution of vaccines produced by the five member countries. We are already doing the groundwork for this initiative. We launched the From Russia with Love campaign during the pandemic, sending medications and necessary equipment, including mobile hospitals and ventilators, to other BRICS countries. Moreover, this initiative included launching the production of Sputnik V in Brazil in January.
Secondly, we should work together in close cooperation to develop cities, which are the main contributors to GDP. The pandemic was the biggest blow to their economies. But at the same time, there were positive effects: this sharply accelerated the digitalisation of services, which will continue after the crisis. And we need to strengthen the coordination of sharing experience in financing smart cities and introducing urban tech in BRICS, that is to say, the services that help to improve services for people and businesses and make the urban economy more resilient.
And finally, the pandemic—with the rethinking of the importance of human life and the value of the space around us—also made us understand that new, more sustainable and equitable principles should underlie a recovering economy. This popularised the concept of “Build Back Better” around the world, driven by the need to switch to a green economy and responsible business conduct. Last November, the BRICS development institutions signed the BRICS ICM’s Principles of Responsible Financing. The principles include commitments to integrate into project assessment the analysis of environmental, social and economic impacts on local communities; promote inclusive and sustainable economic models in BRICS; and much more. The introduction of the provisions of this document into the day-to-day activities of the development banks will allow them to look at their potential projects from a new perspective.
VEB.RF was deeply involved with the development of the national green finance system in 2020, and the system is to receive official approval from the government in May 2021. We find it useful to move towards the harmonisation of national approaches and the exchange of experience in this area. Since certain countries intend to introduce cross-border carbon regulation, it would be reasonable to form a working group of the BRICS ICM to develop a climate risk assessment methodology and incorporate the working group’s deliverables into the international standards and regulatory rules that may affect investment, export, and ratings of development institutions, their customers and partners.
Without being limited to these three areas, the BRICS development institutions cannot help but set themselves even more ambitious goals: to play a key role in formulating new, post-pandemic national development strategies. And in this regard, the BRICS ICM should be a workshop for assembling new financial and investment ideas, models and projects that our countries could apply at home with minimal modifications. This will allow us to deal with the economic consequences of the pandemic more effectively and will make the five countries only stronger.
VEB.RF is a member of the BRICS Inter-Bank Cooperation Mechanism, holding the presidency of the BRICS ICM in 2020.