Russia's Central Bank has cut rescue measures to banks amid signs of economic recovery, the bank's first deputy chairman said on Wednesday.
"Loans to the banking sector have been reduced tenfold, from 4 trillion ($138.9 billion) to 400 million rubles ($13.9 million), since the start of the year. This means we have moved toward ending our anti-crisis measures," Alexei Ulyukayev told a financial forum.
Ulyukayev said the Russian banking system needs to increase capitalization, but it must not be through state subsidies.
Also on Wednesday, however, Russia's first deputy premier and finance minister said the economy will struggle to overcome the aftermath of the global financial crisis for one or two more years.
"The bubble is continuing to shrink, but the problems have not been overcome yet, they will persist for a year or two," Alexei Kudrin said.
He said the current recovery means recession is subsiding, but it is not the end of the crisis.
Russia has seen a recovery fueled mainly by a hike in Urals crude prices this year. The country's benchmark Urals blend cost $76.04 a barrel on Tuesday against $37 at the start of the year.
In a bid to build on the recovery and revive lending, the Central Bank cut its key interest rate to a record low of 9% as of today in the ninth reduction since April.
But Kudrin said on Wednesday with oil prices at $60-$80 per barrel Russia will still have a tough time for about two years.
He said crude prices were likely to fall to an average $60 per barrel in the next two years and climb to some $70 afterward. Russia's 2010 budget is based on $58-$60 per barrel forecast.
A sharp decline in state subsidies to banks has also taken place against the backdrop of misspending scandals involving banks that paid exorbitant bonuses to their top managers.
MOSCOW, November 25 (RIA Novosti)
