Western sanctions have led to “the destruction of the supporting elements of the economy that has developed in Russia over the past thirty years,” VTB Chairman Andrei Kostin said in a column for RBC. In his opinion, three priorities are needed to build a new economic model – new logistics corridors, restarting entire industries and strengthening the country’s defense capability.
Kostin suggests that money for these purposes can be found if a new stage of privatization is carried out, the volume of public debt is significantly increased and the state budget is distributed based on the above-mentioned priorities of the economy.
The head of VTB notes that in recent years, privatization has not figured as a serious source of financing for government programs, and government borrowing and, accordingly, the growth of costs are constrained by the design of the budget rule. However, the task of financing all the necessary expenses and at the same time meeting the given parameters of the budget deficit (2.9 trillion rubles in 2023) requires new measures. In the situation “before February”, the advantages and disadvantages of the next stage of privatization could be discussed, but “today is the time to act,” says Kostin.
“The transfer of state property to private hands on transparent and market terms is a tool that has repeatedly proven its effectiveness. Domestic business has accumulated significant investment potential. There is money in the country,” writes the head of VTB. In his opinion, the resumption of the privatization program “will not only make it possible to successfully attract funds to the budget on market terms, but will give a powerful impetus to clearing those“ bottlenecks ”where the willingness to take risks, make quick and unconventional decisions is especially important today,” since “ private initiative can provide them.”
In addition to privatization resources, Kostin also proposes to use the space provided by the low level of Russian public debt. “The difference between the current level of public debt (about 17% of GDP) and what is considered a ‘problematic’ threshold (above 60%) creates a huge margin of safety. Without significant risks to financial stability, the domestic economy can receive an additional 70 trillion rubles,” the banker writes, emphasizing that the largest banks could be more actively involved in the purchase of federal loan bonds.
Source: Rosbalt
Mario Twitchell is an accomplished author and journalist, known for his insightful and thought-provoking writing on a wide range of topics including general and opinion. He currently works as a writer at 247 news agency, where he has established himself as a respected voice in the industry.
