Russia: Kremlin cancels over 300 billion rubles debt of Russian defence industry
The Russian government has announced its intention to restructure the debts of Russian military-industrial complex in the amount of 750 billion rubles, half of this amount will be written off, Deputy Prime Minister Yuri Borisov said on Thursday, speaking at a board of the Ministry of Industry and Trade of Tatarstan.
“I’ll give you a few figures here. 750 billion rubles will be restructured for defense industry enterprises. Half of them will be practically written off, [for] the rest will be restructured for 15 years at 3% per annum. This is a very serious measure that will free you from huge payments bankers, free up funds for their own development, “Borisov said.
In December 2019, Russian President Vladimir Putin signed an ukaz (decree) outlining his plans to write off a large portion of the debt collectively owed by the country’s defence industrial complex (Oboronnyi Promyshennyi Kompleks—OPK). Details of the decree were not publicly available since the ukaz was classified as secret.
During his address to the defense ministry collegium on December Putin stressed the importance of meeting set targets for military modernization and highlighted the achievements of the Russian State Defense Order.
Putin said the target of 70 percent new or modern weapons and equipment will be reached in 2020, having already reached 68.2 percent.
On December 27, 2019, Borisov announced that measures had been worked out to improve the financial condition of key defense industry enterprises.
Loans would be cleared in the amount of 700 billion rubles.
He also noted that 90% of the debt falls on several integrated structures: the United Aircraft Corporation, the United Shipbuilding Corporation, Uralvagonozavod, High-Precision Complexes and Almaz-Antey.
In January of this year, the head of VTB Andrei Kostin said that the problem of the debt of enterprises of the Russian military-industrial complex was resolved, and a corresponding closed presidential decree was prepared at the end of the year.
Russia’s defense industry is a key national strategic sector and a large employer in Russia. It is a significant player in the global arms market, with Russian Federation being the second largest military products exported after the USA. Combined, Russia and the USA account for 57% of all major weapons exports.
Russia’s defence industry employs 2.5 – 3 million people and accounts for 20% of all manufacturing jobs in Russia.