The Russian government is preparing to sell parts of its largest companies in an effort to raise money. This decision comes as Western sanctions continue to damage Russia’s economy.
Russian Finance Minister Anton Siluanov announced that the country plans to sell stakes in seven major companies. This move is expected to bring in around 300 billion rubles (approximately £3.66 billion).
Since Western countries imposed sanctions on Russia for its invasion of Ukraine, the Russian economy has struggled. Many foreign businesses have left, and the country is facing financial difficulties. The government now hopes that selling state-owned assets will help fill the growing hole in its budget.
This is not the first time Russia has attempted such a plan. More than a decade ago, a similar effort was made to sell off government assets, but it did not fully succeed. However, given the current financial crisis, the Russian government is now reviving the idea.
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Economic expert Vladimir Milov, a former Russian deputy energy minister and critic of Putin, has expressed doubts about the plan’s effectiveness. He believes that these sales are unlikely to attract serious investors, as the assets being sold will still be under heavy state influence. “This is of little interest to market players,” Milov said, adding that no one wants to buy minority stakes that offer no real control over governance.
Seized Assets and Nationalization Concerns
A major part of this sell-off includes businesses that the Russian government seized after the invasion of Ukraine. The Russian authorities have taken over several companies that they claim were harming national security. These include firms in industries like engineering, food production, real estate, and even military-related businesses.
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Although Russian President Vladimir Putin insists that this is not a reversal of privatization, many businesses are worried. The fear is that this plan could lead to more government takeovers in the future.
In recent years, the Russian government has taken control of multiple foreign-linked companies. Now, instead of keeping these businesses under state control, it is trying to sell them off to raise cash. However, Vasily Astrov, an expert at the Vienna Institute for International Economic Studies, described the move as just another episode of property redistribution in Russia. He suggests that private actors close to the government are the most likely buyers, rather than independent market investors.
Financial Struggles Force Kremlin to Act
Russia’s economy is facing several major problems. Inflation is rising, and the country is running out of money to fund its ongoing war. Additionally, there is a severe worker shortage, making it harder for businesses to operate. The government’s savings, which come from its sovereign wealth fund, have also been shrinking. Timothy Ash, an emerging markets strategist at BlueBay Asset Management, noted that Moscow’s financial pressures have become evident as it continues to deplete its financial reserves.
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Finance Minister Anton Siluanov has admitted that Russia needs billions more in its budget. To help with this, the Finance Ministry has added many state-owned companies to a list of businesses that will be sold over the next two years. Some of these sales are expected to take place as early as the second quarter of 2025.
Russian economics expert Boris Grozovski, from the Wilson Center, explained that Siluanov is struggling with the budget for 2025 and beyond. According to Grozovski, the finance minister believes that raising 2-3 trillion rubles a year from asset sales could help ease the budget crisis.
Experts believe that while the government hopes to raise a large amount of money, the reality could be very different. Many past privatization plans have failed to attract real buyers. Investors are hesitant to put their money into companies that will still be under heavy state influence. Some analysts have even suggested that the assets may simply be transferred to businessmen who are already close to the Kremlin.
The Russian government insists that this sell-off is necessary and will help stabilize the economy. However, given the ongoing war and strict Western sanctions, the outcome of this massive asset sale remains highly uncertain.
