On the 6th of August 2014 Vladimir Putin has signed, in response for sanctions from the West and with the aim of protecting of national interests of the RF, the decree about application of certain special economic measures. Thereby the President has prohibited or restricted, for one year, the import to Russia of certain kinds of agricultural products, raw material and provision from countries, which have joined the sanctions against the RF. Will such decision cripple the economy of the country?

National security protection is the most important function of the state. One of its essential constituents is food security, set forth in the relevant Doctrine, approved by the decree of the President of the RF from 30.01.2010 №120. The status of food security is evaluated in it through the test of specific weight of domestic products in the total volume of this article taking into account the import to the country. And threshold values of the indicator, set forth in the Doctrine, serve as a guidemark; it is undesirable for the economy to go below them. For example, on meat and meat products the specific weight of production should be not less than 85%, on milk and dairy products – 90%, fish products – 80%, potato – 95%.

The experts of the Information agency Credinform have estimated the volumes of output and import of food, included in the banned list, and compared the specific weight of this production with the threshold indicator, embodied in the Doctrine (s. Table 1). The production meant for baby food is excluded from calculations.

The exceedance of obligatory indicators of the Doctrine points to that Russia is able to supply its citizens with food products by itself. Embargo on import into Russia of products, mentioned in the table, won’t do harm to Russian consumers. And the introduction of sanctions, from the point of view of food security of the RF, should not cripple the economy of the country.

Moreover, existing volumes of output of products testify to the absence of grounds for the rise in prices on them. Here is no wonder, that lately it was tightened the control over the food market on the side of the Federal monopoly service of the RF, the Public Chamber and other organizations, for the purpose to detect in time and stop illegally actions of unfair retailers, aiming at driving up the prices on the back of embargo.

Under current conditions the importers, carried out the delivery of banned food products, have to reorient their business. It offers good chances for them to organize business cooperation first of all with Russian manufacturers. However, food retailers, for the purpose of cost saving, are interested in direct supplies from China or a number of countries of Asia and Southern America.

According to estimations of the analysts from Credinform, the introduced sanctions will affect most seriously the countries of the USA, Canada, Norway and Australia, but most of all – European states (s. Table 2). At year-end 2013 it was imported more than 4 mln tons of food products into Russia, for a total amount of 8,3 bln $. Considering, that on a number of estimates the import volume was to increase in 2014, then the expected forecast of the damage to economies of the countries, which have fallen under sanctions, can make up to 12 bln $.

The embargo will have a high impact most of all on Norway, which imported in 2013 more than 74% of the total volume of fish products into Russia, on Poland – from the import ban of vegetables, fruit, sausages, ready-made meals and food products, on the USA – regarding deliveries of meat, fish products, fruit and food products, Germany – regarding meat, ready-made meals and food products, the Netherlands – regarding dairy products and vegetables. Lithuania and Latvia can be also considered among badly-hit countries, because a significant volume of import deliveries of different kinds of goods is carried out through their territories.

Since the 1st of July of the current year the Consumer Credit Act has come into force, which is focused on borrower’s rights protection. According to the passed law, the Bank of Russia will limit the maximum full amount loaned (FAL) of retail credits. The medium-term values of FAL will be published quarterly since the 14th of November 2014.

The mechanism of determination of the maximum value of FAL will be as follows: the Central Bank will estimate the mid-market FAL every three months, relaying on the data of 100 the biggest retail organizations. Herewith banks will be forbidden to exceed the FAL more than by one third from the recommendation of the main regulator. According to preliminary estimates of the Bank of Russia, the interest on credit cards should not exceed 45,9%, and on cash loans – 34,6%. However, banks don’t hurry just yet to approximate the cost of credits to the recommended values.

According to experts’ estimates, 20 from 100 the biggest retail banks have rates on credits being higher than the recommended level. Record-holders on the value of non-purpose credits became “Rusfinansbank” and “Alfa-bank”, with maximum rates 98,3 and 86% respectively. Maximum rates on cards were presented by “Renessans Kredit” and “MTS-bank”, with rates 79 and 55% respectively.

Representatives of the banks note, that such high rates on retail credits are explained by the difficult economic situation and high risks. At the same time the prominent players of the market of retail lending state, that they will bring the rate of FAL to the recommended values in the nearest time, in order to meet fully the requirements of the regulator. However, it goes no further than the statement just yet; so, for example, only in July of the current year 8 banks increased interest rates on retail credits (4 on credit cards and 4 on cash loans) and only one bank announced about the reduction of rates on credit cards.

The experts note, that forced reduction of rates will lead to that a number of prominent players will leave the market, and in the future the segment of the retail lending could be hold by microfinance organizations.

See also: Banks want to get more information about borrowers