On March 18, 2025, the Ministry of Finance of the Russian Federation announced the revival of discussions surrounding "large-scale privatization" of state assets, reflecting increasing urgency to bolster the nation’s economy. During a meeting at Rosimushchestvo, Anton Siluanov, the head of the Ministry, explained, "We will have proposals for 'large-scale privatization.' We believe this is precisely the time to put this issue back on the agenda for 2025."
Siluanov’s statement emphasized the ministry's aim to generate anticipated revenues of about 100 billion rubles from the sale of state property this year. This potentially substantial figure is bolstered by recent initiatives aimed at identifying and reclaiming inefficiently utilized assets.
This move aligns with broader goals for economic revitalization, as set by President Vladimir Putin's directive to increase the capitalization of stock markets to 66% of the GDP over the next five years. To achieve this, the Ministry of Finance is considering ramping up public offerings of state-owned enterprises to around 1 trillion rubles.
For 2025, the government plans to float shares of "Dom.RF" worth at least 15 billion rubles on the stock market. Historical insights reveal previous evaluations of ChEMK shares at around 17 million rubles, reflecting the fluctuated fortunes of Russian assets.
Siluanov elaborated on the Ministry's strategy, stating their commitment to bolster public offerings as part of the economic recovery efforts. He pointed out, "We need to activate the privatization of state property, including assets obtained through judicial decisions." This reflects the ministry's pivot to incorporate private sectors more actively as part of their strategy to achieve national objectives.
With specific strategies for the development of state-owned companies on the horizon, new proposals slated for discussion include 59 additional positions for federal property earmarked for privatization spanning 2025-2027. This formula reflects Rosimushchestvo’s evident effort to diversify and optimize asset management.
A tentative plan has been set for auctions to occur by the second quarter of 2025, and these developments represent just one facet of broader efforts to revive the economy, struggling under the weight of budget deficits. Reports indicate the Russian budget is facing significant challenges with revenue generation, and the National Welfare Fund has dropped to its lowest level since mid-2019, currently standing at only 3.4 trillion rubles, or 2.5 times less than the start of 2022.
Consequently, the government's options to replenish its coffers through the issuance of government bonds are dwindling. Siluanov noted, "The gap between the revenues from their placement and expenses for paying interest will soon become unmanageable.” This dire situation only accelerates the need for effective and strategic privatization.
Concerns related to the effectiveness of privatization are compounded by actions taken by the Prosecutor General's Office over the past two years, which have resulted in multiple seizures of assets from Russian companies. Noteworthy cases include the nationalization of the pasta producer "Makfa" and the Chelyabinsk Electrometallurgical Plant, among others.
President Putin himself has weighed in on the topic, clarifying his stance back in April 2024 by asserting, "The seizure of businesses is not about revisiting privatization; it’s about the behavior of owners whose actions inevitably harm the country’s security and national interests.” This perspective offers insight as the government navigates its privatization agenda.
The potential for large-scale privatization brings not only hopes for economic recovery but also discussions around the loss of state control over valuable assets. Some critics are wary of privatization's push, citing fears of insufficient oversight and the historical mismanagement of such processes.
Experts suggest the state must adopt substantial safeguards to minimize risks associated with asset sales. By preparing clear governance frameworks and stakeholder engagement, the government will be able to maintain public trust as it advances its privatization agenda.
Overall, this revival of privatization discussions aligns with pressing national interests and economic realities, spotlighting Russia's commitment to economic restructuring and adaptability as it confronts the challenges of the current fiscal climate. The efforts are not just about asset sales but represent broader strategies aimed at resuscitating the economy, attracting investment, and restoring public confidence. With the auctions scheduled for mid-2025, the global economic community will be watching closely as Russia takes these significant steps toward what it hopes will be renewed financial growth.
