Back to the 1990s? Kudrin proposes country-wide privatization

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February 6 , 2018 – FRN – 

KtovKurse – translated by Inessa Sinchougova

Center for Strategic Research, Alexei Kudrin and analysts of the Russian Academy of Science and Technology proposed an alternative to raising taxes – large-scale privatization of enterprises.

The economy of Russia is returning to a cyclical growth, but without structural reforms it will be low – about 1.5-2% per year, according to the economic monitoring of the Russian Academy of Science.

Russia needs to infuse about 2.3% of GDP into human capital and infrastructure, and the authorities are looking for money. One solution could be an increase in personal income tax from the current flat 13%.

According to the calculations of the CSR, the share of the public sector in Russia’s GDP increased from 39.6% to 46%, in the ten years to 2015 – the value of state companies is now $ 175 billion.

Among the OECD countries, this indicator is greater only in India, South Korea and Italy. According to experts of the CSR, Russia faces a strategic dilemma: to continue to develop state capitalism or to privatise.

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In 2019-2020, privatization could provide up to 0.5% toward the GDP, said the CSR and former liberal Finance Minister Alexei Kudrin.

“Privatization can increase the efficiency of business,  restructure the branches of the economy, replenish the budget revenues.

Today, incomes from privatization are set at just over 36.5 billion rubles. It is necessary to privatize about 80 of the remaining largest companies.”

The CSR proposes to completely keep the state’s shares in only 50-100 strategic companies, and conduct at least four large privatization transactions per year, two of which should involve foreign investors.

Proceeds from the sale of assets reached the level planned Ministry of Finance level only in 2016 due to the privatization of Bashneft. In 2010-2015, plans for privatization were not met by even 20%.

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