Yesterday Russia’s Deputy PM Yuriy Borisov was in Kazan to inspect Tupolev’s work on strategic bombers and gave the media details on the plan to deal with defense-industrial complex (OPK) debt.
The government arms tsar and former deputy defense minister said the plan will restructure 750 billion rubles ($11 billion) in debt. Actually, 300 billion rubles in non-performing loans will be written off. The other 450 will be restructured into 15-year loans at three percent interest.
For Russia’s defense producers, Borisov concluded:
It’s a very serious measure that will allow them to be free of big payments to bankers and free up resources for their own development.
For anything more specific, however, one would have to read President Putin’s secret ukaz on the issue.
This result is somewhat the reverse of what Borisov wanted. More favorable to enterprises than bankers, he sought a 400-450 billion write-off and restructuring of 300-350 billion for 15 years at two percent with a five-year payment holiday to start.
Before that, he sought a complete write-off but Russia’s big banks flatly refused.
Recall this 750 billion rubles represents only Russia’s most troubled defense industry debt. The total burden on the sector is 2.3 trillion rubles ($34 billion).