RUSSIAN state companies and banks are cutting staff and scrapping projects as they prepare for another surge of foreign debt repayments of at least US$35 billion before the end of the year amid falling energy export revenues and a weaker ruble.

    Sberbank, the country’s top bank, has already shed 3,600 jobs this year and is promising to unveil a “management reform” by October expected to include further job cuts. Another big state bank, VTB has laid off 2,000 workers and promised more cuts.

    Gas giant Gazprom scrapped a US$10 billion gas liquefaction plant in the Pacific. Top oil firm Rosneft had to postpone some refinery modernization projects which had been due to cost up to US$15 billion over five years, according to Russian officials.

    “We have taken a decision to adjust our business plans to take into account the macro environment and optimize capital expenditures to prioritize upstream projects,” said Rosneft, whose total debt is estimated at over US$40 billion.

    Russia has a very small sovereign debt of around US$50 billion, but the world’s largest energy exporter has amassed more than US$500 billion in corporate debt over the past decade as its state energy firms and banks borrowed heavily to grow at home and abroad.

    Sanctions imposed on Russia over the annexation of Crimea and incursion in Ukraine since last year have made Western borrowing virtually impossible for most Russian companies, preventing them from refinancing debts as they did during the last fall in oil prices in 2008-2009.

    Rating agencies and Russian fiscal authorities expect debt repayments in July-September to go smoothly, in a repeat of developments in the fourth quarter of 2014 and the first quarter of 2015 when some US$36 billion was paid back.

    Russia’s central bank issued a statement Monday designed to play down fears that large repayments could put the ruble under further pressure as the currency hovered near a five-month low, having hit an all-time low in December.

    Companies buying up hard currency for debt repayments helped drive the ruble sharply lower last year.

    The central bank said it thought real debt repayments until the end of the year would be much smaller than its own initial estimates of US$61 billion, as much of that sum was represented by companies lending to their own subsidiaries which can be rolled over. (SD-Agencies)