Kudrin Says Liquidity On the Rise

Finance Minister Alexei Kudrin said Thursday that banking liquidity was on the mend and that loans to the real economy were rising this month compared with October.

Individuals stopped rushing to withdraw their savings from their bank accounts this month, he said. As another shot in the arm, more than 120 of the country's banks drew 1.2 trillion rubles ($43.9 billion) in unsecured loans from the Central Bank.

"The liquidity situation is generally improving," Kudrin said, speaking after a meeting of the full Cabinet.

The Central Bank has the authority to deposit a total of 3.5 trillion rubles with the banks as a measure to boost their liquidity.

In a sign that the liquidity situation is indeed improving, the Mosprime interbank lending rate fell to 6.58 percent from Wednesday's 8.5 percent, the Central Bank said on its web site. The rate hit a record 22.67 percent on Nov. 17.

The improvements came because the monetary authorities moved in September and October to support banks and the ruble "without batting an eyelid," said Yelena Matrosova, macroeconomic research director at the consulting firm BDO Unicon.

"There was a show of the government's strength," she said. "The state showed its might."

But the improvements don't necessarily mean that the worst is over, Matrosova said. Banks and companies have to pay off "gigantic" foreign debt in December and early next year, and the crisis has yet to bottom out, she said.

Kudrin also said the government was looking at one more potential source of anti-crisis spending. Costs of carrying out its special federal programs, such as developing Sochi ahead of the 2014 Winter Olympics, may go down, freeing some of the money to be redirected to support ailing industries, he said.

The finance minister also said the government would be willing to spend additional funds to retrain workers who are laid off as a result of the crisis, a day after the Federal Labor and Employments Service said as many as 200,000 jobs could be cut in the next two months.