February 4, 2020 / 6:10 PM / 6 months ago

Russian government pulled $25 billion from banks in December as Putin revives stimulus plan

Russian President Vladimir Putin meets with public members in Cherepovets, Russia February 4, 2020. Sputnik/Mikhail Klimentyev/Kremlin via REUTERS

MOSCOW (Reuters) - The finance ministry withdrew 1.6 trillion rubles ($25 billion) from Russia’s two top banks in December, as state spending under a stimulus program ordered by President Vladimir Putin picked up, data showed on Tuesday.

In May 2018, shortly after his re-election, Putin announced a $400 billion spending plan for sectors including infrastructure, housing and health, and designed to lift the economy into the world’s top five by 2024.

But the project became snarled up in red tape, and last month Putin appointed a new government and prime minister with a brief to focus on delivering strategic goals.

Sberbank (SBER.MM), Russia’s top bank, and second-ranked VTB (VTBR.MM) respectively saw 868 billion rubles and 684 billion rubles of outflows of finance ministry funds in December, double that of the same period of 2018, the banks’ reports showed.

At the same time, budget spending rose to 3.3 trillion rubles from 1.4 trillion in November, according to finance ministry’s data.

In January Raiffeisenbank, after analyzing central bank data, highlighted a similar fall in ministry funds deposited with the banks, saying the need to speed up strategic spending was the most likely reason.

Sberbank said the outflow was driven by an increase in state spending and that there was no need to replace the funds as “public expenses are received on accounts of state-funded units and remain on the banks’ accounts”.

VTB told Reuters that December’s outflow was of a “traditional” nature ahead of the year-end. The treasury, which manages the finance ministry’s funds, the ministry itself and the central bank did not reply to requests for comment.

Reporting by Tatiana Voronova; Additional reporting by Elena Fabrichnaya and Darya Korsunskaya; Writing by Katya Golubkova; editing by John Stonestreet

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