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The cabinet is sandwiched between the needs to deliver on the president’s pledges given before his re-election and the Kremlin’s growing reluctance to unload any of the assets previously announced in Medvedev’s bold 2010 privatization program.
According to the new forecasts issued by the Finance Ministry, the budget might lose between RUR 2.4 and RUR 312 billion (!). In case of the last scenario, the government would have to tap into the funds of the reserve fund to compensate for the expenditures.
Privatization of the country’s most appealing assets might be a solution but according to the growing number of experts, including international, the Kremlin is backpedalling on its earlier commitments.
The government is citing the poor macroeconomic situation as the reason for the delay, saying the ‘selloff would raise only 180 billion rubles ($5.5 billion) over the next three years’, while the initial target was to raise ‘$34 billion by the end of 2014’, says WSJ.
Here’s more news that will hardly improve Russia’s investment appeal.
1. Aeroflot's IPO is up in the air, with conflicting reports on its privatization deadlines.
According to media reports, there is a strong lobby arguing for a delay in the IPO on the grounds that the federal budget would lose hefty dividends and that the Russian biggest airline is key to the development of domestically manufactured passenger aircraft.
Originally, the IPO was scheduled for 2014-2016, but in May, Finance Minister Anton Siluanov proposed speeding up the process.
2. Rostelecom will be privatized no earlier than 2014-2016, Vedomosti daily cites a report by the Interfax news agency.
But according to new plans, foreign companies may be denied the right to take part in in the IPO.
The government hopes to raise up to $5 billion during the offering of the country's biggest telecom operator.
3. Russia's new Economy Minister Alexey Ulyukaev shifted most deadlines to 2016, a move which might leave the federal budget gasping for cash.
But these bits of news are no surprise to foreign investors, says WSJ. They have long abandoned hopes that the government will wind down its presence in the economy.
Author: Mikhail Vesely
