LONDON — Billionaire Oleg Deripaska said Thursday that Russia needed to reduce its reliance on foreign borrowing and exports and focus on building a more stable domestic market to stimulate economic growth.
“I don’t believe in export-engine growth,” Deripaska said in an interview. “It’s important for us to find a new growth model. In the past, we borrowed a lot from abroad. We need more stable growth on the domestic market.”
The government’s anti-inflation drive, which helped the Central Bank reduce rates nine times since April, will be key to reviving economic growth from next year alongside a revival in domestic lending, Deripaska said.
“There’s a lot of improvement in Russia,” Deripaska said, praising the work of Prime Minister Vladimir Putin and President Dmitry Medvedev since the start of the economic crisis. “Still, it will be a very challenging 18 months ahead of us.”
He also said his United Company RusAl, the world’s largest aluminum producer, would not restart shuttered capacity while demand for the lightweight metal is still recovering.
“Our policy is very responsible,” said Deripaska, RusAl’s majority owner and chief executive.
RusAl and competing aluminum producers cut output this year after commodity prices slumped. RusAl, which is seeking to sell shares in an initial public offering in Hong Kong this month, said in February that it would curtail 500,000 tons of annual output, or 11 percent of total capacity.
Aluminum has declined 36 percent from a record $3,380 a ton in July 2008.
But commodity investors have “realized that aluminum is the best hedge against the dollar and energy resources,” Deripaska said. “People don’t believe in the dollar, and commodities benefit.”
Russian aluminum demand is rebounding and will rise 15 percent to 20 percent next year, said Deripaska, who also controls automaker GAZ Group.
“There is a new stimulus program more or less, cash for clunkers, which will create a lot of demand for our commercial vehicles,” he said.
- RusAl said in a statement that co-owner Mikhail Prokhorov agreed to exchange $1.82 billion of the company’s debt for a 6 percent stake as part of a $16.8 billion restructuring.
The deal with Prokhorov’s Onexim Group, boosting his stake to 19.2 percent, will cut the cost of servicing RusAl’s debt, the statement said. Deripaska will own 53.4 percent after the deal.
The accord values RusAl at $30.3 billion, Bloomberg calculations show.
The remaining $880 million of RusAl debt held by Prokhorov will be restructured on the same terms applied to international lenders — on a “pay-if-you-can” basis for the first four years and a refinancing over the following three.
RusAl’s restructuring is the biggest in Russian corporate history, involving more than 70 domestic and foreign banks. It cuts total debt to $14.9 billion and removes a barrier to the IPO.
Under the restructuring, RusAl said it would pay a reduced interest rate of 8 percent to 9 percent on $2.1 billion of loans with Russian banks including Sberbank, VTB Group and Gazprombank.