Russian business daily “Vedomosti” reports that the Moscow city budget deficit is expected to reach 218 billion rubles (USD 3.2 billion) in 2017 due to infrastructure development financing requirements. Moscow authorities plan to invest as much as 1.9 trillion rubles (USD 28.1 billion) in infrastructure in the period 2016-2019 after the city halted most of its development projects in 2015 due to economic uncertainty. Most of the infrastructure budget will be spent on transportation (654 billion rubles, or USD 9.7 billion), primarily to support and expand the metro network. The city will also increase its investments in road infrastructure in order to prepare for the FIFA 2018 World Cup.
Gazeta.ru reports that the Russian Ministry of Finance prepared a proposal for the 2016 budget that involves an apparent increase of military expenditures. Regardless of the budget shortfall of 374.5 billion rubles (USD 6 billion), the Ministry proposes to increase the expenditures by approximately 300 billion rubles (USD 4.8 billion) to 16.4 trillion rubles (USD 262 billion), increasing the deficit to 3.66% of the GDP. As the Ministry plans to cut practically all “civilian” expenditures to offset the shortfall, this will free up a total of 678.8 billion rubles (USD 10.9 billion). The beneficiaries of this balance are not known, but as they are listed in a confidential annex not open to the public, it is very likely that they are related to defense and/or law enforcement.
As usual, some programs and regions will be impacted by the changes to the federal budget more than others, but it is interesting to note that the sequestration will affect even Crimea, as the program for the socio-economic development of the annexed peninsula will be cut by 15.6%.
Amendments to the federal budget management process also seem to be under way and should enable the Minister of Finance to reallocate up to 10% of all expenditures to military and security institutions without consultations with the Government or the Parliament.
The Ministry of Finance refused to comment on either of the proposed changes.
Russian business daily RBK reported that the leading Russian online search engine Yandex.ru decided to change the rules for featuring products on its marketplace Yandex.Market. The new system gives preference to the products sold directly in Yandex’s store, which is currently the option of choice for approximately 20% of the suppliers present on the marketplace. Naturally, this is advantageous for Yandex, as the Russian online heavyweight earns a higher commission for products sold on its pages than for redirection to retailers’ sites. According to Yandex, it currently earns 5.38% of the total sales generated on its Yandex.Market platform.
Yandex will give preference to suppliers that agree to sell their products in its store, placing their offer at the top of respective search results. The new model will be introduced in phases, starting with Moscow and ending with distant regions by the end of 2017. At this point, it will affect 179 most popular product categories, including computers, home appliances, car accessories and baby program. Yandex.Market features approximately 2.000 product categories from 20.000 domestic and foreign Internet stores.
While Yandex believes that a single interface will contribute to customer loyalty, the new system will probably force some products with lower margins to leave its marketplace.