Billionaire Oleg Deripaska said Russia could find its coffers empty already next year and needs investment from “friendly” countries to break the hold of sanctions on the economy.
“There will be no money already next year,” Deripaska said Thursday at the Krasnoyarsk Economic Forum in Siberia. “We will need foreign investors.”
Funds are now running low and “that’s why they’ve already begun to shake us down,” said Deripaska, founder of United Co, Rusal International PJSC, the biggest aluminium producer outside China.
Deripaska’s comments are among the most outspoken by a prominent business leader as the government looks to turn the screws on large companies after ending last year with a record fiscal deficit and the budget still deep in the red to start 2023.
Authorities are already planning to raise additional budget revenue with proposed changes to how they tax oil companies and may wrest more money from other commodity producers by means of a one-time levy.
While Russia saw a surprise boom in capital spending last year, the outlook has turned more grim, especially as massive military spending strains public finances. But even with sanctions and other restrictions squeezing revenues from energy exports, the economy may grow slightly this year, according to the International Monetary Fund.
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What Bloomberg Economics says....“Borrowing is expensive now and the money saved up in the National Wellbeing Fund will run out by the end of 2024. So they will have to economize and cut spending.”—Alexander Isakov, Russia economist
Deripaska, who’s been sanctioned by the US since 2018, was also placed under European penalties after Russia attacked Ukraine a year ago. Long vocal on matters of economic policy, he called for peace in the weeks after the invasion but has taken a more cautious line on the war in recent months.
Speaking on Thursday, Deripaska said building “state capitalism is not an option” and warned of “serious” pressure from sanctions.
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“Russia should keep developing the market economy,” he said. “A foreign investor will look at how a Russian investor makes money, what conditions exist.”
Countries boasting “serious resources” can emerge as possible partners for Russia, Deripaska said. The government needs to make sure Russia is attractive for such investors by ensuring a safe business climate with more economic freedoms and competition, according to the tycoon.
Even with many of the world’s biggest economies arrayed against Russia, it still retains access to markets with a population of 4.5 billion and accounting for $30 trillion of global gross domestic product, he said.
“We thought we were a European country,” Deripaska said. “Now, for the next 25 years, we will think more about our Asian past.”