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Russian Central Bank rate hike means doomsday for cheap lending to farmers

December 16, 2014, 12:09 UTC+3 MOSCOW

Late on Monday, December 15, Russia's Central Bank raised the key rate from 10.5% to 17%

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Russian Central Bank

Russian Central Bank

©  ITAR-TASS/Sergei Bobylev

MOSCOW, December 16. /TASS/. Central Bank’s sudden key rate hike on Tuesday may prompt the government to abandon a preferential lending program for farmers, Russian Agriculture Minister Nikolay Fyodorov said Tuesday.

“This is an unpredictable event,” he told reporters, speaking of Central Bank’s decision to raise the rate to 17% from 10.5%.

“If there is such a key rate, of course lending below the key rate must be done with a special decision of the government, which is unlikely to be taken now. In such a case, I must take a real situation into consideration as an official and a politician.”

Fyodorov said he was not aware of Central Bank’s plans to raise the rate late Monday.

Preferential lending includes compensation of interest paid on loans to farmers up to the key rate or partially. Loans to the sector amount to around $34.3 billion, overdue debts stand at $2.7 billion, the minister said.

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