22 Apr 2022 16:56

Russia should remain market economy despite sharp increase in govt's role - VTB head

MOSCOW. April 22 (Interfax) - The Russian economy, despite the growing role of the government in the current circumstances, should retain its market foundation, VTB head Andrei Kostin said, using an example from the banking sector to illustrate his point: if banks are forced through non-market methods to take on the losses of clients, using lending organizations as a tool to fight the crisis, they will then have to be supported with capital.

"It's very important for us on the whole to preserve the market aspect of the economy. This is being talked about all the time right now," Kostin said in an interview with the Rossiya 24 television channel.

"The government is indeed playing an enormous role today, including a financial one, among others. It has sooner become something of a universal institute for development, helping the economy develop, but it shouldn't intrude on operational activities and try to regulate all and sundry, starting with prices and ending with who makes what investments," he said.

There are currently enough funds in the budget and the National Wealth Fund for "serious" support for the economy and business in concrete areas, Kostin said.

"The government, of course, should finance many areas very, very, selectively today, surgically and without turning on the printing press," he said.

With this kind of government support for the economy, it is important to preserve as much entrepreneurial freedom as possible and not get in the way of business "exhibiting its best qualities, those of a fighter, I would say," Kostin said.

Discussing the idea of the greater "responsibility" of banks for financing the real sector, it needs to be understood that "the reality is completely different, and we have to live by it," he said.

"I am just the same against first eviscerating banks and then filling them up with money all the time. It's nonetheless better for all business dealings to be commercial. They can have various margins, but they shouldn't inflict losses on any of the parties," Kostin said.

Despite the similarities to the crisis of 2008-2009 in the figures showing the decline of the economy, "the situation is, of course, more severe," Kostin said. "Guys, let's evaluate the situation realistically, the slump in demand and other kinds of issues [...], it's important to understand that we are crossing into slightly new realities," Kostin said as advice to clients that have yet to realize the severity of the situation.

"One must not be afraid, not tremble, one must simply adapt to this, find solutions and move forward," Kostin said.