Davos: privatization of Russian state-owned businesses key to funding deficit
Russia's leading bankers have been using the World Economic Forum in Davos to push for the privatization of their companies, with the heads of Sberbank and VTB being the most notable.
On Thursday, Sberbank and VTB said the state could cut its stake in Russia’s top two lenders to 50% plus one share as early as next year.
Vladimir Dmitriev, Chairman of Moscow’s main distributor of anti-crisis funds, Vnesheconombank, says it has also set the privatization process in motion, but it will take place later.
“We have presented our view on how VEB may be privatized, but the perspective for this development is long term rather than short term.”
The Russian government needs the money. It expects a budget deficit for several years to come, as it contends with a sluggish economy and falling revenues from commodities.
Like other countries, Russia’s delegation comes to Europe’s highest city straining under a mountain of debt, with big state corporations needed to be sold to avoid the deficit snowballing.
And as William George, Professor at Harvard Business School, says, Russia is not alone in looking for new sources of cash.
“I think, we are going to see much slower growth in the developed countries like the United States and Europe and Japan. Debt levels in the US are going to drag down US growth. We say they won’t but they will.”
A poll of Davos delegates found sovereign debt to be the top candidate as the cause of the next global crisis. But this is unlikely to diminish the appetite of cash hungry governments.