Moscow - A top official said Russia was at or close to the bottom of the financial crisis, adding that the Kremlin was happy to see foreign creditors take stakes in major companies to claw back bad loans.
In comments to foreign media, First Deputy Prime Minister Igor Shuvalov said the government was increasingly upbeat about the Russian economy and hoped it would start growing again by the end of this year if the global economy doesn't sharply deteriorate. As oil prices have risen above $50 a barrel and the ruble has steadied against the dollar, the Kremlin says there are tentative grounds for optimism, sounding an increasingly confident note about its handling of the financial downturn.
"The first phase is over," said Mr. Shuvalov. "Most businesses have already adapted and the budget is not playing out according to the worse scenario." Mr. Shuvalov confirmed that the Kremlin was no longer willing to offer large-scale bailouts to distressed corporations, something it did during the first stage of the crisis, but said that the government would help strategically important firms that had a genuine need. He stressed that commercial banks were now awash with cash, however, and could cover many of the lending requirements.
Mr. Shuvalov said foreign creditors were welcome to swap bad loans for equity stakes in major Russian companies, apart from "a very limited list" of corporates. He didn't identify the companies that were off limits. However, analysts said the list would include companies such as OAO Gazprom, Rosneft, Sberbank and VTB Bank, but not necessarily Norilsk Nickel.
Promising that the Kremlin would assess such applications "favorably" and within a minimal time frame, Mr. Shuvalov said it would explain any refusals. "If we don't like it, we will explain why," he said. "We are talking about only a few, not dozens." He said he thought creditors would prefer cash to risky assets, however.
Squelching speculation that the government was keen to expand its already far-reaching control of the economy, Mr. Shuvalov said that it didn't have the resources or expertise to manage many more big companies and signaled that the Kremlin was more interested in protecting and bolstering its foreign-exchange reserves, currently at just below $380 billion.
Talking about aluminum giant UC Rusal, a company that has debts of $14 billion, he suggested that the Kremlin had given the company all the help it could. A state-controlled bank has already loaned Rusal $4.5 billion. Mr. Shuvalov said he opposed extending the terms of that loan, saying Rusal should seek fresh loans from commercial banks or find new shareholders.
The sharp drop in oil prices, Russia's biggest export earner, was a blessing in disguise, he added. It could force Russia to overhaul its economic model and finally diversify away from energy exports, he said.
Economic data have yet to catch up with Mr. Shuvalov's optimism. The Economy Ministry on Friday said the economy would probably shrink by 7% year on year in the first quarter. Gross domestic product contracted by 8% in the first two months of this year, it added, while exports declined by nearly 50% in the first two months, compared with the same period last year. The ministry has forecast that GDP will fall by 2.2% for the full year.
