OREANDA-NEWS. December 10, 2007. Speaking at the Global Investment & Finance Forum in Moscow, CentreInvest Group CEO Alexey Gurin called on the Russian government and financial community to take proactive steps to support the country’s small and medium sized businesses in an effort to prevent a financial crisis caused by a potential collapse of the debt market, the company's press service informs. Gurin proposed the creation of a Bailout Fund to support the debt market through the securitization and purchase of publicly traded debts of small and medium sized businesses.

"The liquidity crisis, or crisis of unreliable debt, is a result of the re-valuing of assets which started in the U.S. – primarily in the real estate market. This is a global process, and it will affect all markets without exclusions," Gurin said. “If small and medium businesses are supported and can stay afloat, then the economic tsunami’s force will be considerably dissipated at an early stage before it washes over Russia."

The proposed Bailout Fund would act as a sort of "life-preserver", and would not compete with the equity market, as it will take no stake in the businesses, or with banks, as it will only securitize debt instruments. When businesses are unable to cover short-term debt, the fund would act as a "lender of last resort". Gurin said that the size of the fund should be at least 250 billion rubles, which he predicts would be enough to securitize the debts of between 200 and 500 businesses.

According to Gurin, the specifics of the crisis' consequences for the Russian economy is characterized by the country’s dependence on worldwide demand for high-priced raw materials, and by immature small and medium-size businesses which are already hamstrong by low capitalization and the challenges of aggressive growth, and the dependence on capital injections from abroad.

"A global liquidity crisis hits smaller companies the hardest. The first symptoms are already in place - a problem with credit borrowing among small and medium businesses, as well as a total destruction of the debt market and the inability for these companies to access cash to grow and maintain their businesses," Gurin also added.

He believes that "big companies get most of the government attention. But if we take care of small businesses, big companies will take care of themselves". Gurin suggests that the government could participate in the plan with financing and guarantees. The bailout fund could be managed jointly by the financial community and government representatives.

"If the government is ready to make this step, we are ready to establish an investment bank consortium and to attract the funds needed," Gurin concluded.