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Russia will not bail out company owners -Finance Minister

Source: Reuters - Thu, 20 Mar 2014 11:04 GMT
Author: Reuters
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By Darya Korsunskaya

MOSCOW, March 20 (Reuters) - Russia will not bail out companies who may face financial difficulties, Finance Minister Anton Siluanov said, as business owners worry about the impact of western sanctions over the government's moves to annex Crimea.

German Chancellor Angela Merkel said on Thursday that European Union leaders would signal at a summit later in the day their readiness to ramp up punitive measures against Russia, including politically sensitive economic sanctions.

The west is responding to Moscow's decision to make the Ukranian region of Crimea part of Russia.

"We will watch how the situation develops, in what direction both our economy and the situation in the financial sector go," Siluanov told a local business conference on Thursday.

The European Union is the top trading partner for Russia, accounting for half of total exports and imports, according to the latest data from the economy ministry.

Siluanov said the government would, if necessary, support the country's most important companies and institutions as it did following the 2008/9 global financial crisis.

But it did not have the resources to give financial support to the vast majority of companies.

"We do not want all the time to be helping company owners," he said.

Russian government and central bank used billions of dollars from its gold and foreign exchange reserves to help the country's largest companies, such as carmaker Avtovaz and aluminium producer Rusal, through the financial crisis.

Siluanov estimated the aid at 8 percent of gross domestic product.

The reserves, although still the world's fifth-largest at $494 billion, are more than $100 billion smaller than at the beginning of the 2008 crisis.

Siluanov said the government is ready to help businesses in terms of retraining workers, stimulating job creation, but not more than that. Companies have had the opportunity since the crisis to get themselves in better shape, he said.

"There has been time to look into problems, get rid of excess property, reduce costs, improve capitalisation, profits," Siluanov said.

"Those who have not done it, well, sorry, friends. We will aim primarily to ensure social stability to help businesses and not owners." (Reporting by Darya Korsunskaya; Writing by Lidia Kelly; Editing by Erica Billingham)

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