Russian Producers Call for Revising Government Subsidy Conditions

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They claim they are unable to pay back subsidies under the current conditions

Russian producers are calling for the revision of terms of repayable government subsidies. They claim that under current market conditions they cannot repay subsidies administered by the cinema fund within three months of the film's release.

"The Russian [film] industry remains overall loss-making, and you can only pay back subsidies if you have profits," Sergei Selyanov, head of the film company STV and co-chairman of the Russian association of film producers, was quoted as saying by the daily newspaper Izvestia.

He suggested that in the current situation, the proportion of state cash subject to be paid back should be lowered from the current figure of 43 percent to 5 to 10 percent for the next three years, during which the industry would gain strength.

So far, the cinema fund has insisted that interest-free subsidies are released on much more favorable conditions than bank loans.

Russian producers depend heavily on state cash, which until two years ago was provided to them exclusively as non-repayable subsidies. This year, of $50 million (3 billion rubles) the government earmarked for the film sector via the cinema fund, $21.7 million (1.3 billion rubles) is supposed to be paid back.

However, producers who took state subsidies last year had problems paying them back, and the cinema fund is currently suing the producers of 20 projects it funded on a repayable basis. As only a fraction of local films turn in a profit, the negative trend is widely expected to continue.

According to Selyanov, the existing practice would lead to a further decline in local films' box office share, from the current 17 percent to 12 percent over the next two to three years.

For the last few months, the Russian government has been concerned with local films' box office share, threatening to introduce protectionist steps if the figure doesn't go up this year from 2013's 18.2 percent.

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