Support The Moscow Times!

Putin Says No Privatization at Knockdown Prices

Russian President Vladimir Putin chairs a meeting on privatisation at the Kremlin in Moscow, Russia, Feb. 1, 2016. Kremlin Press Service

President Vladimir Putin on Monday threw cold water on proposals to quickly sell stakes in state companies to fill holes in Russia's budget.

"There should be no sale of shares cheaply, at giveaway prices. This won't bring particular benefit to the budget," Putin said at a meeting with officials and heads of state firms.

Ministers had considered privatizing stakes in a major companies including banking group VTB and oil giant Rosneft to raise money after a plunge in the price of crude, Russia's main export, left the budget struggling to finance a growing deficit.

Privatization could help avoid raising taxes, cutting spending or draining fiscal reserves, while also boosting capital in the banking sector, which has limited access to Western capital because of sanctions imposed during the Ukraine crisis.

However, Russia's economy is in recession and share prices are low, meaning the government would make less from their sale.

Putin added that the government should not lose control of strategically important companies, according to a transcript on the Kremlin website, limiting the size of any privatization program.

Analysts previously? told The Moscow Times? the government may struggle to find buyers and be forced to finance privatization through state banks, a tactic would turn the process into a budget bailout mechanism and undermine hopes that it could bring in new management expertise and improve efficiency at the companies on sale.

Putin on Monday ruled this out, saying that money from state banks should not be used and participants must have plans to develop the businesses they buy.

… we have a small favor to ask.

As you may have heard, The Moscow Times, an independent news source for over 30 years, has been unjustly branded as a "foreign agent" by the Russian government. This blatant attempt to silence our voice is a direct assault on the integrity of journalism and the values we hold dear.

We, the journalists of The Moscow Times, refuse to be silenced. Our commitment to providing accurate and unbiased reporting on Russia remains unshaken. But we need your help to continue our critical mission.

Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just 2. It's quick to set up, and you can be confident that you're making a significant impact every month by supporting open, independent journalism. Thank you.

Continue

Read more