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Thu, Sep 24, 2009 - Page 10 News List

Russia assets up for privatization

AFP , MOSCOW

Russia is to embark on a new program of privatization, two-and-a-half years after its last major sale of state assets, officials were quoted as saying yesterday.

After the chaotic asset sales of the 1990s under former Russian president Boris Yeltsin’s term created a class of super-rich oligarchs and a major public backlash, the government has lately preferred to increase its stakes in firms.

But the financial crisis has blown a major whole in the Russian budget, with the budget deficit predicted to be around 8 percent of GDP this year and reduced only slightly to 6.9 percent next year.

Russian Finance Minister Alexei Kudrin told the Vedomosti financial daily that with the income from privatization Russia could reduce its use of reserve funds and cut the volume of planned bond issues needed to make up the budget shortfall.

“In other words the sum [from privatization] will go to reducing the deficit,” he said.

But Vedomosti quoted government sources as saying that a new privatization drive would be aimed as much at improving the image of Russia, which is still criticized by the West for having excessive state control of the economy.

“It’s clear that for the most part we are not talking about additional budget income — now is not the best economic time for sales — but about image, to show the world the liberalism of the government,” a source said.

Russian First Deputy Prime Minister Igor Shuvalov, a key ally of Russian Prime Minister Vladimir Putin, told Bloomberg TV in an interview that “now is the time that we can return” to privatization. He said that the government had “good assets” to offer.

Russia’s last major asset sale was the May 2007 privatization of 22.5 percent of its second largest bank, state-owned VTB, which raised US$8 billion.

Russia in July 2006 sold 15 percent in state-owned oil giant Rosneft which raised US$10.4 billion for the state coffers.

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