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Central Bank chief says regulator worried about Russian regions’ bank debts

Russian regions’ bank debts dropped 16% as of end-2016

MOSCOW, February 15. /TASS/. Russia’s Central Bank is worried about bank debts of the regions, the regulator’s Chief Elvira Nabiullina said Wednesday.

"The situation with growing accumulated bank debts of the regions triggers concern. The indebtedness particularly surged in 2015 - by 16%. In 2016, there was a slight decrease in bank financing provided to Russia’s constituent entities, though the regions simultaneously raised securities borrowing," she said.

Nabiullina said that "commercial lending is only reasonable in case a region has its own revenue base with growth potential in order to be able to service commercial loans." "Financing budget deficit using commercial loans without accountable sources of future repayment is not the best option," she added.

According to the data provided by the Analytical Credit Rating Agency (ACRA), Russian regions’ bank debts dropped 16% as of end-2016 (first since 2011) and was less than liabilities to federal budget. ACRA experts expect that more public budget loans will be repaid than received in 2017.