Kudrin on sanctions: Western banks already closing credit lines to Russian corporate sector

ST. PETERSBURG. March 13 (Interfax) – Former Russian finance minister Alexei Kudrin is apprehensive about possible Western sanctions against Russia and said limitations in the banking sector have already begun.

“I can say quite definitely: credit line limits for Russia are being closed,” said Kudrin, who is currently a member of the Presidential Economic Council. “Our corporate sector currently has $700 million in credit abroad. It will start shrinking today because many credit limits will not be prolonged, some joint projects will be halted; and that has already begun. That will ‘infect’ the domestic market somewhat, enterprises are becoming more cautious, waiting to see whether new, tougher sanctions will be imposed,” Kudrin said on Thursday at a joint session of the presidiums of the unions of industrialists and entrepreneurs in St. Petersburg and Leningrad region.

There will be economic growth this year, but “no way will it be the 3.5% planned last summer and not even the 2.5% forecast at the end of last year,” he said.

“Even now, many estimate that growth will be roughly 1.5%. I believe that under the circumstances, it will be less than 1% this year. It might even be zero growth this year,” Kudrin said.

“We will probably get intensification of the conflict with the West, which does not accept certain Russian actions [relating to Ukraine]. In this connection, certain sanctions that will affect our economy are expected. They create new challenges for the macro-economy and investment in the economy, not just foreign investment. They will affect our domestic investors, public sentiment. If they are limited to freezes on the accounts of individual persons, then perhaps it will affect some enterprises and operations, lists of goods, products. I would call that the soft version. Certain foreign companies might reduce the scope of their operations in Russia,” he said.