Russia’s failing privatization may cause $30bn budget shortfall
Withdrawing strategic enterprises from sale and privatization delays may cause Russia’s budget to receive less than it was planned from the country’s privatization program in 2014-2016, according to the Finance Ministry calculations.
Initially the state budget was supposed to get 925 billion
roubles ($28bn) from state assets sale in the next 3 years.
However, the current assessment of risks sees Russia's budget
short of 887 billion roubles ($27bn) from the privatization
program in 2014-2016, Ria Novosti quotes unpublished Finance
Ministry documents. In other words, the Finance Ministry admits
that in the worst case, the privatization program could almost
completely fail, Lenta.ru reports.
The Finance Ministry warns that the shortfall of funds from
privatization could lead to cuts in the Federal Reserve fund. It
could reach 3.8 percent of GDP instead of the planned 5.1
percent, RIA Novosti reports.
The new privatization program for the next three years was
adopted by the government at the end of June. The new version
sees the Russian government holding back on the
privatization of several major state enterprises and retaining
control of the Rosneft oil company.
This year the budget revenues from privatization this year could
reach $2bn billion instead of the planned $13bn, the Finance
Ministry reported in March 2013. Revenues from the
privatization collapse because some state-owned companies get
privatized through additional share issue instead of offering
state shares to investors. This means that income from the sale
goes directly to the companies, not to the budget, Lenta.ru
reports. Such a scenario, in particular, has been used for the
secondary public offering of VTB in May 2013.
