The Kremlin will not bail out Russia’s oligarchs or their foreign creditors, said Igor Shuvalov, the first deputy prime minister, on Friday, putting pressure on both sides to renegotiate the $130bn (€96bn, £90bn) in foreign debt owed by the largest companies.
Mr Shuvalov said Russia was open to foreign creditors converting their loans to indebted Russian industrial groups into equity.
But he acknowledged that the creditors would not necessarily be keen to take on the shares and called on them to agree to deals that would extend payments and allow companies to pay off debts even at times of low commodity prices.
“Creditors most of all want to get their money,” he said. “No one needs assets at the moment because they are worth nothing.”
His words are a warning to oligarchs not to look to the state for more funds, in a further hardening of the government’s position since last autumn when the state bailed out tycoons such as Oleg Deripaska and Roman Abramovich to prevent their stakes in strategic metals companies from falling into foreign banks’ hands.
“Some Russian entrepreneurs have taken on such high debt levels that they have suffered injuries not compatible with life,” he said.
Mr Shuvalov said the government was willing to defend only a limited number of companies from stake-building by foreign creditors, while applications for stakes in Russian companies would be reviewed rapidly and in “friendly” fashion.
“The list of [strategic] enterprises for which we are ready to fight is extremely limited. We are talking about only a few, not dozens … If you want to convert the debt convert it,” he said. “There should be no difference between the major Russian creditors and the foreign ones.”
Mr Shuvalov said the move to suspend government bail-outs, first announced in February, came as Russia was entering a new stage of crisis management following the market’s precipitous fall at the end of last year and the rouble devaluation.
“We have ended the stage where people were in a state of shock and nervous about everything that is happening … We are now in a condition where we … are close to the bottom. In certain sectors we see a revival and a good mood,” he said.
21 Mar 2009 12:57am
Source: The Financial Times