November 28, 2017, 00:14 / Economics

The government has come up with a way to build infrastructure in installments

The new fund will be given 300 billion rubles of state guarantees, but they will not be taken into account as state debt Margarita Papchenkova Olga Adamchuk

The Ministry of Economic Development will announce the mobilization of money for infrastructure projects / PhotoXPress

The Ministry of Economic Development proposes to create a state Fund for Investment in Infrastructure Projects, as stated in the roadmap for infrastructure mortgages. The ministry will send the map to the government this week, Vedomosti has reviewed it. A representative of the Ministry of Economic Development confirmed the idea.

The Fund will provide a capital grant to the private partner (concessionaire). And it will attract money from the market through bonds backed by government guarantees. Under state guarantees, the Ministry of Economic Development wants to request a limit of up to 300 billion rubles. for 2018–2020, it can be approved by spring amendments to the budget - plus 290 billion rubles. state guarantees that the Ministry of Finance has already allocated to the project financing factory.

These bonds will be serviced at the expense of current budget expenditures, and repaid, including through new budget revenues, including those brought in by the projects themselves. Regions will also be able to participate in the infrastructure fund.

For the state, this is an installment plan: not immediately money from the budget, but first a loan from the market, officials explain. The ratio of debt to budget expenditures – 1 to 10 – will make it possible to multiply budget expenditures on infrastructure, as well as plan for longer than three years.

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It looks like a guarantee fund for VEB’s project finance factory, but it pays off bonds at the expense of income from the project, the infrastructure fund – at the expense of the budget, and the proceeds from the project go to the budget, officials explain: in the factory, the profitability of projects must cover all interest expenses, here a project may not bring in enough money but still be important to the state.

With the help of this fund, bottlenecks will be resolved, profits and taxes of companies will increase, the official continues, which is why the state largely assumes the risks of projects. The fund will most likely belong to VEB, the issue is still being discussed.

Until now, the Ministry of Finance has resisted all ideas to increase state guarantees - they increase the sovereign debt. These 300 billion rubles. the debt will not be increased immediately, Vedomosti’s interlocutors assure: the Ministry of Finance is preparing amendments to take into account state guarantees as debt only at the time of the actual issuance of money.

The fund was discussed with the Ministry of Finance, it is not against it, the official claims. The Ministry of Finance reported that it had not officially received any proposals.

At the beginning of December, the Prime Minister will consider projects in five areas (see inset), from which the work of the fund can begin. “The pilots need to work on projects of various types,” explains the official: the construction of vegetable warehouses will reduce inflation, the toll road in Tula is necessary for production, which has already been launched in the region.

What is the money for?

The Tula-Novomoskovsk toll highway and regional roads, the production and logistics complex of the Armed Forces in the Arkhangelsk region and infrastructure for the Digital Economy program, construction of fruit and vegetable storage facilities.

The goal is to boost the country through investment in infrastructure, said officials from the Ministry of Economic Development: it is catastrophically underfunded. Budget spending on infrastructure, according to InfraOne, decreased from 3.7% of GDP in 2012 to 2.5% in 2016. Infrastructure mortgages should pull money from private investors: according to InfraOne’s forecast, in 2017-2018. they could invest 2.3–2.4 trillion rubles, but they will invest 527–545 billion. We need at least $100 billion, i.e. 6 trillion rubles, says one of the largest market participants.

The topic is especially relevant for municipalities and regions, agrees Alina Zaborovskaya from EY: if the fund guarantees the grantor’s payment, the investment attractiveness of projects will increase sharply.

The fund will make it possible to attract more private investment in state-priority projects, but the criteria for selecting projects still need to be worked out, comments Zaborovskaya.

It is unlikely that you will succeed for 1 ruble. get 10 rub. from the market, PwC partner Dmitry Kovalev is skeptical, more like 4 rubles, but the projects lack such financial leverage.

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The Ministry of Economic Development is counting on the strong interest of non-state pension funds in infrastructure bonds: the risk is the same as that of OFZs, but due to lower liquidity there will be a premium to the yield of OFZs, the yield will have a premium of several tens of basis points. State guarantees and returns higher than those of OFZs are not a sufficient condition for investment, warns the top manager of one of the non-state pension funds: a high credit rating from ACRA is also important, the Central Bank also limits funds in terms of portfolio structure. Profitability is not higher than the market one, high volatility is a problem; There are very few infrastructure projects that would not raise questions from the Central Bank, confirms Andrey Neverov, member of the board of directors of the NPF Soglasie-OPS. The Ministry of Economic Development wants to propose to the Central Bank to change the requirements for the structure of the NPF portfolio, officials promise.

Regions will be able to transfer infrastructure costs to this fund, including from their road funds, the official says. For example, Novgorod has a fund for 2 billion rubles, and 1.5 billion rubles. spent on repairing individual potholes at the request of residents, instead of re-equipping the entire infrastructure. “The fund will allow them to raise money from the market,” he says.

The main problem of most regional public-private partnership (PPP) projects is the lack of budget leverage, without which the economics of the projects do not fly, and there has always been the question of where to get money for state co-financing, says Maxim Tkachenko, executive director of the National PPP Center: the only possible approach in the current fiscal conditions – use low sovereign debt.

Most likely, the fund will help select and finance PPP projects faster, but the effect may come to naught if the state selects projects from people without experience in financing successful PPPs, Kovalev warns and suggests that the fund’s key performance indicators should not be calculated for a year , and for the period of construction of the facility plus at least 2–3 years of operation.