Budget Funds May Be Used For Liquidity

Regulations aimed at boosting liquidity in the banking sector by allowing banks to temporarily hold spare budget funds should be ready by the end of the month, Deputy Finance Minister Tatyana Nesterenko said.

"The goal is to prepare all the documents by April," Nesterenko said Wednesday in comments posted on the Finance Ministry's web site.

Lenders enrolling with the Central Bank to participate in auctions for the right to hold the funds must have capital of at least 5 billion rubles ($210 million), a suitable credit rating and be part of the deposit insurance system, Nesterenko said. She did not specify the rating or when the auctions might begin.

Nesterenko said she expected the Central Bank to draw up a list of "about 30" banks that qualify for the auctions.

Net capital outflow may continue until May or June, after reaching $20 billion in the first two months of 2008, Alexei Ulyukayev, the Central Bank's first deputy chairman, said in an interview published this week in the Vremya Novostei newspaper. The country attracted a record $82.3 billion in inflow last year.

The Finance Ministry and the Federal Treasury will establish when and how much money can be made available from the budget at the auctions, while the Central Bank will assess the level of liquidity in the banking system and decide which banks meet the criteria for participating, Nesterenko said.