28 Dec 2023 10:51

Privatization could help reduce Russian govt borrowing, ease pressure on debt market - Siluanov

MOSCOW. Dec 28 (Interfax) - Privatizing stakes in major companies and banks could be a way to finance part of Russia's budget deficit and make it possible to not completely carry out the ambitious borrowing program for next year, Finance Minister Anton Siluanov said.

Privatization can be seen as an additional reserve, but "this is a very complex issue," he told reporters on Wednesday.

"On one hand, we need to reduce the share of the state sector and, on the other hand, get money. This could be a source for financing the budget deficit. Our borrowing program for next year is substantial - 4.1 trillion rubles [almost 2 trillion rubles more than this year], so privatization as a one-off measure would be most welcome for us," Siluanov said.

Siluanov said earlier that his ministry has submitted a proposal to the government to reduce the state's stakes in a number of major companies in which it holds more than 50% and do so without losing a controlling interest. "This could be tens, hundreds of billions. The list is in the government, we still have to discuss it," he said, adding that there are about 30 major companies where "one could think about reducing the state's stake and replacing [it] with private business."

Siluanov said there are many companies in which the government holds almost a 100% interest, but the state is a less efficient owner than private investors and, as a rule, the operations of these companies improve with the arrival of a private investor. "If it is a strategic company, of course the state will own a controlling stake, but if there is a private shareholder this always stimulates the company to more efficiently manage assets, reduce costs, earn more profit for its shareholders. Private investors, of course, are interested in profit, dividends," he said.

Privatization has not been a significant source of budget deficit financing in recent years. Potential major sales are periodically discussed, but are not carried out.

Siluanov also recalled that the government was able to reduce the domestic borrowing program for this year by 1 trillion rubles thanks to additional oil and gas revenues.

"I don't know, one wants to hope for the best, maybe our commodities situation [in 2024] will be alright. This year we refrained from 1 trillion rubles in borrowing because oil and gas did well. One would like to hope," Siluanov said, adding that the signs for oil prices at the moment are mixed but pointing more to low prices.