Comments

Late in October 2014, the Government of the Russian Federation has introduced for consideration to the State Duma of the Russian Federation a draft law which establishes the right of regions to introduce tax holidays for entrepreneurs using a simplified system or patent system of taxation.

According to the OPEC decision of November 27, in a situation of oversupply of oil on the market oil production quotas will not be reduced in 2015 and remain at the level of 30m barrels a day. According to Abdalla-Salem-Al-Badri, the OPEC's Secretary General, there are no grounds for reduction of oil production quotas: the market has to find the equilibrium price and even if that price is low now the OPEC recognizes it as a fair one.

According to the Rosstat's report, within a year the average pay of Russian officials has grown by 18.3%. The average pay of federal civil servants amounted to nearly Rb 96,500. As in 2013, officials of the Administration of the President of the Russian Federation, the Council of Federation and the State Duma occupy the top three places of the rating of the highest salaries.

According to Gaidar Institute's business surveys, enterprises reported that the start of 4Q 2014 was no less positive for them than the end of the previous quarter. Good demand dynamics, successful control over the stock of finished products allowed the industrial sector to keep up industrial growth in October too.

Russian residents make active use of foreign (incl. offshore) "layer-type" companies which hold Russian and foreign assets beneficially owned by Russian residents.

A series of essential government decisions on further reforms in the science sector were expected in the period of October to November 2014, primarily those concerning the system of former academic institutions currently being within the jurisdiction of the Federal Agency for Scientific Organizations (FASO).

On November 21, 2014, the State Duma adopted in the third reading amendments to the Tax Code, which allow a sales tax to be introduced in the cities of federal importance. The size of the sales tax will be pegged to the value of the sales business patent. Moscow entrepreneurs will have an opportunity to test in practice the new amendments effective fr om July 1, 2015.

Despite the failure of the leaders of G-20 countries in taking advantage of the G-20 summit in Brisbane for searching remedies for the existing global political issues, it should be recognized that the Summit had few achievements which contributed largely to the fulfillment of global financial and economic objectives.

The rate of inflation has become a priority for the Central Bank of Russia: to combat it the Central Bank of Russia has reduced the volume of its foreign currency interventions and, actually, switched over to a floating exchange rate of the ruble.

Heavy inflationary pressure and adverse developments in the Russian economy have become the key factors for the adjustment of the monetary policy objectives, as evidenced by a new version of The Guidelines for the Single Monetary Policy in 2015 and for 2016 and 2017.

The fact that bank depositors in Russia are fearing of actual devaluation of their capital may provoke banking panics, in which case it is small and medium-sized banks that are very likely to be principal victims. The panics would be followed by economic contraction, decline in output and unemployment growth.

The Federal State Statistics Service (Rosstat) has published the preliminary Q3 2014 results, showing that Russia's GDP growth rates stood at 0.7% relative to the same period last year, less than in Q1 (0.9%) and Q2 (0.8%).

The federal budget has recently been playing an essential role in total balance of regional budgets.

A few days ago the Central Bank of Russia submitted to the State Duma a draft guidelines for the single monetary policy, also including Central Bank's updated version of the macroeconomic development projection for 2015-2017.

On November 10, the Central Bank of Russia announced the abandonment of the existing mechanisms of the exchange rate policy by giving up both the use of the interval of admissible values of the ruble cost of the bi-currency basket and regular interventions not only at the limits of the interval, but also beyond them.

From November 5, 2014, with the ruble value of the bi-currency basket amounting to the limits of the operating interval the volume of interventions by the Central Bank of Russia will not exceed $350m a day. In addition to the above, an intervention by the regulator will be possible only in case of the bi-currency basket's value being at the limits of the interval or beyond it during the entire trading session. So, fr om now on the Central Bank of Russia will not react to short-term swings of the exchange rate.