Page 8 - bne IntelliNews Country Report: Russia Dec17

of a governor using these metrics.”
Since 2012, the Kremlin has pushed the cost of national policy initiatives onto regional balance sheets. Thus far, they have managed to put off absorbing the liabilities – but their day of reckoning will eventually come, barring a recovery of the Russian economy. However, the same May Decrees that have bankrupted regional treasuries have also weakened the prospects for dynamic growth by prioritizing salary increases over productivity increases. Putin may claim a desire to solve the regions’ fiscal difficulties, but unless the Kremlin realizes that its own policies are the problem, the eventual cost of absorbing regional liabilities will continue to rise.
2.2 The state share in Russia’s economy is 40% not 70%
The share in GDP of Russia’s state-owned enterprises (SOE) is a lot less than 70%, according to Rosstat and the Bank of Finland, which say when all the various contributions are totted up the share of SOEs in the economy is closer to 40%.
In recent years 11–12% of revenues of all companies and organisations (excluding funding received from government budgets) have been generated by companies or organisations that have at least some direct ownership by the federal government or a regional government (at least about 30,000 entities), Rosstat estimates.
Their revenues are highly concentrated. Surveys by the Russian Presidential Academy of National Economy and Public Administration (RANEPA) show that just 54 large SOEs account for 8% of revenues of all firms. When 20 indirectly state-owned companies are added the share rises to 12%.
The business magazine Ekspert arrived at a similar figure of 11% by combining revenues of all SOEs on its "Ekspert 400" list of Russia's biggest companies.
Gazprom and Rosneft together already account for more than 4% of total revenues. Based on the financial accounts of Gazprom and Rosneft, RANEPA researchers estimate that the share of those two in Russian GDP has clearly exceeded 10% in recent years.
And if the ratios between earnings and GDP produced in other SOEs are similar to that of Gazprom and Rosneft, RANEPA reports the SOEs account for around 25–30% of GDP.
That is a lot lower than some other recent studies. The most widely quoted was the estimates of the Federal Antimonopoly Service (FAS), which said state-owned companies actually account for a whopping 70% of GDP.
Rosstat has a much more modest estimate if all the state contributions are added up: the share of the government sector, including federal, regional and local governments, in GDP slightly exceeds 13% in recent years. When the above estimates of the SOEs' share are added, the share of the entire public sector would be around 40%.
While the 70% number has been widely publicised, even other independent
8 RUSSIA Country Report December 2017 www.intellinews.com