Call for Phasing Out Assistance to Inefficient Businesses Advocated by Andrei Kostin
Andrei Kostin, the head of VTB, one of Russia's largest banks, has suggested that the country needs significant structural changes and a focus on key industries to boost its economy. Speaking at the St. Petersburg Economic Forum, Kostin highlighted the need for Russia to transition to market methods, with the state only supporting enterprises that are truly state priorities.
Kostin's proposals come as the Russian economy grapples with inflation and fiscal realities. He suggested increasing the inflation target from the previous 4% to around 8% to reduce the pressure of monetary policy. This move would allow for more flexibility in managing the economy, he argued.
In terms of industry focus, Kostin emphasised the importance of supporting export-oriented sectors and raw material producers. These sectors, he believes, show more growth potential even under a high-interest environment. He also suggested a focus on sectors such as machine-building and instrument-making, which could improve the efficiency of production.
However, Kostin did not provide details on how the shift in enterprise support would be implemented or what specific changes would be made to address issues in aviation and other crucial areas. He did point out that there are numerous enterprises in Russia that are inefficient and are leeching off the system, but he did not specify which enterprises he considers inefficient.
Regarding the role of the state, Kostin advocates for a more active stance in supporting enterprises, particularly those crucial for the economy’s stability and growth. He believes that without such state support, uncertainty will prevail, harming businesses and investment climates. This view aligns with the ongoing broader tension between technocrats and security officials (siloviki) about economic governance strategies.
In conclusion, Kostin's statements reflect a pragmatic stance on balancing inflation control with economic growth and the government’s crucial role in stabilising and backing the economy. However, he did not discuss the potential impact of the suggested changes on the overall Russian economy or provide a timeline for implementing them. Nonetheless, his calls for increased efficiency and productivity, as well as a shift in supporting only state priorities in enterprises, are likely to fuel discussions about the future direction of Russia's economy.
The suggestions by Andrei Kostin, head of VTB, indicate a focus on utilizing market methods in the Russian economy, with a priority placed on key industries such as finance and business, particularly export-oriented sectors and raw material producers. To reduce inflation and provide more flexibility, Kostin proposes increasing the inflation target and emphasizes the importance of supporting sectors like machine-building and instrument-making to enhance production efficiency.
