Page 54 - RUSRptSept18

contribute to the National Pension Fund (NPF) to collect enough points for an insurance pension upon retirement, to contribute to the individual pension capital system in whatever amount they deem necessary for retirement, or not to make any contributions at all. If an individual chooses the latter, he will have the right to a social pension at age 70. Of note, social pensions are very low, amounting to roughly 5,180 rubles ($81) a month in 2018. Officials are also discussing another option: in addition to the 4% tax, the self-employed will have to pay a minimum of 3,000 rubles ($47) a month to the NPF. This will buy them the minimum number of points for an insurance pension. The Ministry of Finance, however, does not like this idea. According to one official, at a payment of 3,000 rubles a month, the self-employed will pay less to the NPF than they will eventually receive. As a result, the self-employed pension will effectively be subsidized by the payments of hired workers, which he considers hardly fair.
Russia's Finance Ministry warned that it would have a RUB204bn ($3.3bn) hole in budget revenues in it if state-owned enterprises (SOE) don’t pay out the 50% of profits they have been ordered to by the government ,InterfaxandV edomosti dailysaidonApril23citingunnamed sources in the government.
MinFin’s complaints is the latest in a running battle between the liberal fraction running Russia’s finances and the heads of Russia’s largest companies, most of whom run their enterprises like personal fiefdoms. MinFin continues to demand that state-owned enterprises pay the requested 50% of IFRS net profit in dividends, warning the Prime Minister Dmitri Medvedev that 2018 budget will have a big hole in it if they don't.
The 2018 federal budget plans to raise RUB380bn in dividends based on 50% of IFRS net profit, most of the state majors dodge. Gazprom natural gas giant alone will save paying the state RUB78bn by paying 25% of consolidated net profit.
Rosneftegaz holding controlled by influential ally of President Vladimir Putin Igor Sechin is another long-time rival of the Ministry of Finance in the fight for dividends , and still holds half of the RUB40.6bn interim dividends for January-June 2017 from Russia's largest oil company Rosneft. Rosneftegaz does nothing other than hold shares and has less than a dozen employees. Sechin is head of both the oil company and the holding.
Also Russian oil pipeline monopoly Transneft dodged the full dividend payout for 201 7. t is unlikely that given the favourable oil prices environment the government will manage to create urgency and will to have the oil and gas giants budge.
"It is worth indicating that the amount under discussion is equivalent to around a $2/barrel increase in annual oil prices, thus the negative effect on the budget in relation to the lower-than-expected dividends payments is clearly not an issue this year given the substantial spike in oil prices," Alfa Bank commented on April 23.
In 2016 Russia faced a crisis as the hole in the budget was not RUB200bn but RUB2 trillion and had no way to finance it. In the end a 19% of Rosneft was sold in a faux privatisation that turned out to be more of a loan and the government got through the year.
Covering the dividend short fall gap will be a lot easier. The ministry could increase net domestic market borrowing by exactly RUB200bn in 2018, the RIA news agency reported on Monday, Reuters and RIA Novosti said in a separate report citing the head of the ministry's debt department Konstantin Vyshkovsky.
54 RUSSIA Country Report September 2018 www.intellinews.com