MOSCOW, Feb 21 (Reuters) – Russia is scrapping plans to collect tax on corporate Eurobonds placed before Jan. 1, 2013, following a storm of protest from major Russian companies and banks who warned that the move threatened seriously to dent fragile investor confidence.

Russia’s finance ministry said late on Monday that it is dropping the idea and may apply only a partial levy to papers issued from next January onward.

The ministry’s statement provides reassurance to international bondholders of Russian companies, who faced the prospect of significant losses if issuers had redeemed their bonds at par in response to the ministry’s earlier proposal to withhold 20 percent profit tax on interest payments at source.

“The ministry of finance is treating investors in the right way – it’s an investor-friendly decision – and in this respect it’s a positive outcome,” said Elena Kolchina, fund manager of the Renaissance Russian Debt Fund in Moscow.

“The immediate source of investor concern appears to have been removed,” said Mikhail Galkin, a fixed income analyst at VTB Capital.

“From an investor standpoint that was the only risk: There was no risk of suffering from the tax – there was a risk of high cash price bonds being redeemed early at par.”

Some of Russia’s biggest corporate borrowers, including top gas producer Gazprom and its second largest state bank VTB, had been facing large bills in relation to existing bond programmes.

MOSCOW (Reuters) – Vladimir Putin has ordered Russia’s state firms to clean up their act, but without fundamental reforms he may only scratch the surface of endemic graft and conflicts of interest that tar the country’s bloated national champions.

Such reforms would require Putin to dismantle an entrenched system of corruption, patronage and cronyism, in which many of his own allies are enmeshed through their ties with the state-owned giants that are the focus of the crackdown.

“The problem is that all these state companies are very well-connected, and not well controlled,” said Elena Panfilova, the head of the Moscow office of anti-corruption body Transparency International.

The prime minister has his eyes on a triumphant return to the presidency in a March 4 election. As well as rhetorical swipes at unpopular oligarchs, Putin has taken aim at the state giants that dominate energy, infrastructure and banking.

“Of course it’s a pre-election move, to show an effective program against corruption,” said political consultant Dmitry Orlov, who advises the pro-Putin All-Russia People’s Front movement.

“But this isn’t just a PR move: It’s a real move that affects thousands of managers at these companies and their suppliers.”

In a bid to prevent state-appointed managers from rewarding themselves or their relatives with lucrative contracts, Putin has instructed all state companies to furnish details about the ownership of every firm with which they do business.

MOSCOW (Reuters) – Vladimir Putin has ordered Russia’s state firms to clean up their act, but without fundamental reforms he may only scratch the surface of endemic graft and conflicts of interest that tar the country’s bloated national champions.

Such reforms would require Putin to dismantle an entrenched system of corruption, patronage and cronyism, in which many of his own allies are enmeshed through their ties with the state-owned giants that are the focus of the crackdown.

“The problem is that all these state companies are very well-connected, and not well controlled,” said Elena Panfilova, the head of the Moscow office of anti-corruption body Transparency International.

The prime minister has his eyes on a triumphant return to the presidency in a March 4 election. As well as rhetorical swipes at unpopular oligarchs, Putin has taken aim at the state giants that dominate energy, infrastructure and banking.

“Of course it’s a pre-election move, to show an effective programme against corruption,” said political consultant Dmitry Orlov, who advises the pro-Putin All-Russia People’s Front movement.

“But this isn’t just a PR move: It’s a real move that affects thousands of managers at these companies and their suppliers.”

In a bid to prevent state-appointed managers from rewarding themselves or their relatives with lucrative contracts, Putin has instructed all state companies to furnish details about the ownership of every firm with which they do business.

MOSCOW, Feb 3 (Reuters) – Russia’s central bank held interest rates on Friday and signalled a steady hand in the months ahead as it weighs risks to inflation and growth and as the country elects a new president.

Although inflation has hit a post-Soviet low of 4.1 percent on delays to increases in household utilities bills and a stronger rouble, price pressures are expected to kick in from mid-year, making it tough to meet the bank’s 6 percent target.

The economy is unlikely to sustain the pace of last year’s 4.3 percent expansion, with strong consumption offset by weak manufacturing, and external risks from a possible flare-up in the euro zone debt crisis weighing on policymakers’ minds.

“Given current internal and external macroeconomic trends, the level of interest rates … is considered by the central bank as acceptable for coming months,” the central bank said in a statement.

The bank left the fixed one-day repo rate – which has become an effective ceiling for the money market as banks contend with tightening liquidity – at 6.25 percent, as expected. The largely symbolic refinancing rate was held at 8 percent.

The one-day deposit rate, a de facto floor for the market when liquidity is abundant, was left at 4 percent.

Prime Minister Vladimir Putin, front-runner to win the March 4 presidential election, has sought to boost the feelgood factor among Russian voters by delaying annual increases in their electricity and gas bills.489

MOSCOW (Reuters) – Winning Russia’s March presidential election could be the easy part for Prime Minister Vladimir Putin, who has called for a “decisive tax manoeuvre” to put the country’s increasingly oil-dependent public finances on a more sustainable footing.

Although Russia, the world’s largest energy producer, ran a fiscal surplus last year thanks to strong oil prices, the high and rising price at which the budget balances poses the real risk of a fiscal crisis in the next six-year presidential term.

“The Russian government needs to carry out a major budget consolidation over time,” said Odd Per Brekk, the International Monetary Fund’s resident representative in Russia. Without one, he warned, “Russia is much more exposed to an oil price shock.”

Since 2006, the volume of government expenditures has risen by an average of over 20 percent each year – double the rate of inflation. Their share of Russia’s gross domestic product has rocketed from 29 percent to 39 percent.

That now places Russia in the same league as relatively high-spending, high-tax European economies rather than low-tax emerging markets such as China and India.

The challenge for Putin, assuming he takes office in May as appears highly likely, will be to squeeze revenues out of an economy that is already stuttering under a mounting tax burden.

The so-called “tax manoeuvre,” aimed at reducing taxation on entrepreneurs by shifting it onto under-taxed sectors and activities, is one solution gaining favour among policy makers.

MOSCOW (Reuters) – Winning Russia’s March presidential election could be the easy part for Prime Minister Vladimir Putin, who has called for a “decisive tax maneuver” to put the country’s increasingly oil-dependent public finances on a more sustainable footing.

Although Russia, the world’s largest energy producer, ran a fiscal surplus last year thanks to strong oil prices, the high and rising price at which the budget balances poses the real risk of a fiscal crisis in the next six-year presidential term.

“The Russian government needs to carry out a major budget consolidation over time,” said Odd Per Brekk, the International Monetary Fund’s resident representative in Russia. Without one, he warned, “Russia is much more exposed to an oil price shock.”

Since 2006, the volume of government expenditures has risen by an average of over 20 percent each year – double the rate of inflation. Their share of Russia’s gross domestic product has rocketed from 29 percent to 39 percent.

That now places Russia in the same league as relatively high-spending, high-tax European economies rather than low-tax emerging markets such as China and India.

The challenge for Putin, assuming he takes office in May as appears highly likely, will be to squeeze revenues out of an economy that is already stuttering under a mounting tax burden.

The so-called “tax maneuver,” aimed at reducing taxation on entrepreneurs by shifting it onto under-taxed sectors and activities, is one solution gaining favour among policy makers.

MOSCOW (Reuters) – While rising internal political risks in Russia have grabbed the spotlight, the most serious economic threats are external and a shock would complicate Prime Minister Vladimir Putin’s bid to return to the Kremlin.

Russia is showing economic resilience amid international financial turmoil, which it is better able to withstand than in the past. But contagion effects from the euro zone threaten an already shaky recovery through weakening exports and capital flight as banks cut exposure to Russia.

If the euro zone does not get its house in order and an economic slump leads to a sharp and sustained drop in oil prices, Russia will feel much more than a chill.

“Europe is extremely important for Russia,” said Vladimir Tikhomirov, chief economist at Otktitie Securities in Moscow.

“The consensus is that the euro zone will manage to muddle through. But the reality is that we’re being gradually dragged into a crisis that could become deeper and deeper.”

So far, Russia’s economy, which is expected to grow by around 4 percent in 2011, has shrugged off the euro-zone blues. But it has been helped by temporary factors, including a much-improved harvest and a boost in election-related expenditures.

Most economists anticipate slower growth next year. In its most recent economic forecast for Russia, the International Monetary Fund anticipates “subdued” growth of 3.5 percent, with “significant downside risks”.

MOSCOW (Reuters) – While rising internal political risks in Russia have grabbed the spotlight, the most serious economic threats are external and a shock would complicate Prime Minister Vladimir Putin’s bid to return to the Kremlin.

Russia is showing economic resilience amid international financial turmoil, which it is better able to withstand than in the past. But contagion effects from the euro zone threaten an already shaky recovery through weakening exports and capital flight as banks cut exposure to Russia.

If the euro zone does not get its house in order and an economic slump leads to a sharp and sustained drop in oil prices, Russia will feel much more than a chill.

“Europe is extremely important for Russia,” said Vladimir Tikhomirov, chief economist at Otktitie Securities in Moscow.

“The consensus is that the euro zone will manage to muddle through. But the reality is that we’re being gradually dragged into a crisis that could become deeper and deeper.”

So far, Russia’s economy, which is expected to grow by around 4 percent in 2011, has shrugged off the euro-zone blues. But it has been helped by temporary factors, including a much-improved harvest and a boost in election-related expenditures.

Most economists anticipate slower growth next year. In its most recent economic forecast for Russia, the International Monetary Fund anticipates “subdued” growth of 3.5 percent, with “significant downside risks.”

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

By Jason Bush

MOSCOW, Oct 28 (Reuters Breakingviews)- Polyus (PLZL.MM: Quote, Profile, Research) must wait. The Russian goldminer’s plans for a premium London listing and FTSE 100 inclusion suffered an unexpected setback after the Russian government failed to sign off on Polyus’ change of address. The delay may be politically motivated. It should remind London regulators that it is unwise to waive their rules for Russian companies.

Both the Russian government and the company have played down the delay. Still, it’s odd that Polyus’ long-planned move was not better prepared. And the regulatory setback comes not long after Polyus’ largest shareholder, billionaire Mikhail Prokhorov, staged his much-publicised attempt to enter politics, which ended in fiasco. Lately he has become an outspoken critic of Russia’s system of government.

No one should be too surprised if Prime Minister Vladimir Putin, who heads the commission that must sign off on Polyus’ listing plan, has wanted to remind Prokhorov who is boss. In itself this may be no great tragedy for Polyus: it could be more a gentle nudge than an iron-fisted clampdown. Still, it’s a further reminder for investors that strategically-sensitive companies cannot escape the unpredictable regulatory environments of the countries in which they operate.

This is not the first embarrassing setback for Polyus. Its listing plan was previously called into question by an ugly row with former Kazakh owners of KazakhGold, a subsidiary that had a pivotal role in Polyus’ convoluted legal transformation. Having accused theses shareholders of massive fraud, Polyus found itself the butt of regulatory attacks in Kazakhstan. The two sides eventually compromised, but their peace deal is still subject to hiccups. The risk of other such imbroglios won’t disappear with the expedient of registering Polyus in the UK.

All of which lends weight to the arguments of institutional investors who worry the UK Listing Authority is being soft on Russian FTSE-hopefuls. F&C Investments recently expressed concerns that Polyus’ 13 percent free float was below the 25 percent threshold that is normal for premium listings, and criticised the practice of granting waivers to emerging market applicants. Strict listing requirements won’t guarantee against upsets caused by unpredictable politics. But at least, when rules are fully enforced, investors only have themselves to blame when they get burned.