Russia’s budget may be short 887 billion rubles from the privatization program of 2014-2016, according to a draft of the basic trends in the budget policy obtained by RIA Novosti. The document has not been officially reported.
Sources at the Ministry of Finance indicate that the privatization plan forecast revenue for the budget of 230 billion rubles in 2014; 445.1 billion in 2015 and 250 billion in 2016. The Finance Ministry fears that the income may turn out to be much less – risks for 2014 were appraised at nearly 198 billion rubles; 442.1 for 2015 and 247 billion for 2016. In other words, the Finance Ministry believes that in the worst case, the privatization program will be virtually entirely cut.
The Ministry warns that the shortfall in funds from privatization will lead to a reduction in the Reserve Fund – it could consist of 3.8 percent of the GDP instead of the planned 5.1 percent.
The privatization program for the next three years was passed by the government in late June. It envisioned the sale of Rostelekom [Russian Telecommunications], Rosspirtprom [Russian Liquor Production], the Vnukovo Airport and a number of other assets. At the same time, some of the state assets which had earlier been slated for privatization remain under control of the government. Thus, officials declined to lose control over Rosneft [Russian Oil] and VTB [formerly Foreign Trade Bank], and Rosselkhozbank [Russian Agricultural Bank] was excluded from the privatization program since it is planned to turn it into an institute for development.
On the whole, the privatization program was valued at the Ministry of Economic Development at 1.7 trillion rubles, although it was noted that only 1.02 trillion rubles would be available for the budget. In addition, income of only 925 billion rubles was recorded in budget projections.
In March 2013, the Finance Ministry announced that revenue for the budget from privatization in the current year could consist of 60 billion rubles instead of the planned 427 billion. In particular, the program is failing because some of the state companies will hold a follow-on offering, and not distribute government shares among investors. That means that the revenue from the reduction of the state debt will go directly to the companies themselves. Under this scenario, the second distribution of shares of VTB took place in May 2013, among others.