It Was Decided To Put The Russian Fleet Renewal Program "under The Knife"

There's no money for it.

A large-scale program to modernize the Russian civilian fleet, under which the authorities planned to build more than 200 merchant, fishing and cruise ships in 2023-27, has fallen victim to federal budget problems.

Minpromtorg proposed to the government to cut the program's financing by more than 40% - from 231 to 134.8 billion rubles and to exclude 69 vessels from the plan, RBC reports citing the department's presentation.

According to the new plan, under the preferential leasing program, the State Transport Leasing Company (STLC) will deliver 191 vessels to customers instead of 260. First of all, the program will lose cargo, fishing and dredging vessels, RBC notes.

The reduction of the program, which was launched in 2023, promising to renew the rapidly aging civilian fleet, is a forced measure in the conditions of budget cuts, says Oleg Sutyrin, partner at SBS Consulting. The main problem is a sharp rise in the cost of construction work, he points out.

The government planned to pay for the construction work with money from the National Welfare Fund (for 136 billion rubles), but the Fund lost two-thirds of its liquid assets during the three years of war: after large-scale spending on megaprojects and patching budget holes, the National Welfare Fund was left with $52.6 billion of unspent money compared to $120 billion before the invasion of Ukraine.

It is increasingly difficult for the authorities to pay for the program at the expense of the budget, which spends every third ruble on the war: oil and gas revenues fell by a third in June, and the deficit reached 3.8 trillion rubles by the end of the first half of the year, instead of the originally planned 1.2 trillion rubles for the entire year.

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