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Russia to buy out mortgages from banks

03/12/2008 23:14

Russia's government pledged a mortgage buyout Wednesday and announced more aid for major airlines and other companies beyond an existing $200 billion financial rescue package, Russian news agencies reported.


The finance ministry is drafting legislation to buy out mortgages from several private banks this year "to improve the credit system," state-run RIA-Novosti and ITAR-Tass quoted Finance Minister Alexei Kudrin after a meeting with President Dmitry Medvedev and other officials.


He did not specify how much the government will spend on the buyout.


The global financial crisis is the biggest test Russia has faced in a decade. High oil prices fueled an eight-year consumer boom, with Russians flocking to banks for mortgages,car loans and other credit. As the credit crunch began to take its toll on the economy, banks have dramatically cut on lending and increased interest rates.


Medvedev earlier urged private banks to give Russians who have recently lost their jobs more time to pay off mortgages and other loans. Russia's biggest bank, state-controlled Sberbank, has said it was considering the proposal.


Deputy Prime Minister Igor Shuvalov, who was also at the meeting, announced other measures, including a boost for Russia's biggest airlines.


"The major air carriers will be provided with loan facilities worth up to 30 billion rubles," he was quoted as saying, adding that the money will go to Aeroflot, Transaero and a new airline company now being created by state corporation Russian Technologies from bits and pieces of bankrupt regional air carriers.


The government will also allocate 7 billion rubles ($250 million) to subsidize interest rates for loans to large agriculture producers, RIA-Novosti and ITAR-Tass quoted Shuvalov as saying.


Source: SFGate



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