Author`s name Dmitry Sudakov

Russian officials see zero where they can get millions

Small business in Russia still hopes for the support from the state. It has been reported recently that the government may allocate 100 billion rubles for business loans. One only needs to decide where to take the money from first. The risk of default is pretty high, officials say. Why do they see only risks where they can get good profit?

The question of support to small and medium-sized business in Russia was discussed at a forum organized by the "Support of Russia." First Deputy Prime Minister Igor Shuvalov supported the allocation of 100 billion rubles on business loans, but it did not make people believe that small business in Russia was about to become successful. The suggestion to take the above-mentioned amount from  the National Welfare Fund (NWF) generated a vivid discussion. The source of credit assistance to small business became a stumbling block: a part of officials were strongly opposed to the use of the NWF as a financial source for the initiative. Yet, they could not offer a good alternative instead.

Deputy Finance Minister Andrei Ivanov suggested using residual assets from the accounts of public corporations. Deputy Prime Minister Olga Golodets mentioned retirement savings. The idea with residual funds of state-owned companies has a right to exist, even though it is highly unlikely that state-run monopolies will agree to share their funds. To crown it all, the version with the pension fund looks absolutely void.

In general, the scheme to support entrepreneurs according to the plan of the Ministry for Economic Development is as follows. The funds from the NWF should be placed on accounts at Vnesheconombank (VEB). The rate was proposed to be set at 5.25 percent per annum. VEB would have to lend to banks at 6.25 percent, while the latter would give loans to medium-sized businesses (worth at least 1 billion rubles) at 10 percent per annum. This scheme was rejected instantly. Finance Minister Anton Siluanov asked to think about the risks of lending to fragile companies.

And yet, if we look around, we will see that in the U.S., small business accounts for 34.9 percent of net income. In Japan, small businesses in the manufacturing industry produce 56.6 percent of all products. Russian officials see nothing but losses in small and medium-sized businesses. They simply do not want to notice such benefits from the support of this segment of economy as market saturation, price stability owing to growing competition and, for the same reason, the improvement of product quality.

In addition, as long as the State Duma started talking about new industrialization, it is small and medium-sized business that could give a boost to sustainable development through the introduction of new technologies. It is about time one should admit that the idea to bestow the mission of innovation on one scientific center near Moscow (Skolkovo) is doomed to fail. Yet, small, innovative enterprises in Russia simply do not have a chance for a breakthrough, because any breakthrough requires investment. This investment has already been made - the money is at Skolkovo. 

The hope that officials will all of a sudden be enlightened is too small, especially under the conditions of economic stagnation and budget restraint for years to come. 

"I absolutely support Shuvalov, but entrepreneurs have no hope. There is no money for them. It would be desirable, they can make promises, but most likely they are not going to allocate anything," a member of the State Duma Committee on Financial Markets Eduard Markin said. According to him, the National Welfare Fund as a source of funds for business is out of the question.

Maria Snytkova


Read the original in Russian 

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