The Finance Ministry is looking for new sources of replenishment of Treasury. For this purpose it is proposed to oblige state-owned companies on an ongoing basis to pay dividend not less than 50% of the profits under IFRS.
photo: Gennady Cherkasov
Difficulty in filling of budget revenues are forcing the White house to look for unconventional solutions. In April, the government adopted a decree requiring state companies to pay dividends by the end of 2015 at least 50% of net profit according to IFRS (consolidated revenues), if it is more profits for the company (income of parent company without subsidiaries. — Ed.). However, the situation for a range of conditions that were analyzed in determining the amount of dividend payments.
Now the Finance Ministry proposes a one-time rule be made permanent. A draft order, the Ministry has sent to the government. Moreover, it is planned to deprive state-owned companies opportunities to belittle dividend, referring to a long-term investment. This year a “loophole” used by “Gazprom”: citing a large investment program, the group paid 186,8 billion rubles of dividends — 24% profit under IFRS. “Many companies are lobbying for relaxations in the requirements for dividend policy under the pretext of the need for the implementation of investment programs. The recipes of struggle against lobbying has long been known for the openness of all procedures, the political will of the authorities and harmonization of requirements for all state-owned companies. It requires the renunciation of dispensing relief in individual basis,” — said the Deputy General Director of JSC “Finam” Yaroslav Kabakov.
The logic of the Finance Ministry’s proposals is obvious. “The budget deficit for the first 8 months of this year amounted to 2.9% of GDP. The indicator improved in comparison with the first half, when the deficit reached 4.3% of GDP. However, the seasonal increase of budget expenditures in the fourth quarter and the total value of the budget deficit may exceed the target level for the year at 3%,” — said the head of analytical Department IK “Russ-invest” Dmitry bedenkov.
“The initiative of the Ministry of Finance is extremely useful from the point of view of filling the budget, and from the viewpoint of improving the investment climate in the country”, — believes senior analyst AMarkets Artem Deev. In his opinion, the decision to oblige state-owned companies on a regular long term basis to pay not less than 50% of net profit on dividends is a good signal to investors that the authorities intend to make the game rules more understandable. In the medium term the changes will increase the capitalization of the largest Russian companies. “It is also necessary to increase the liability of management for failure to comply with the orders of the authorities. This may be the dismissal and fines. There is a large company that effectively uses a scheme in which the accumulated profit in the subsidiaries, which minimizes the amount of dividend payments to minority shareholders”, — said the expert.
As expected, the initiative of the Ministry of Finance, the heads of state-owned companies met in different ways. At the end of the Sochi economic forum the General Director of “Russian grids” Oleg Budargin said that his company is ready to pay dividends in the amount of 50% of net profits on a long term basis. “The statement Budargin goes against the position of many leaders of the Russian commodity and energy companies, who argue that the implementation of the Directive of the government on the payment of dividends is complicated by the presence of major commitments to the programme, — said Andriy Romanchuk, the Deputy Chairman of the expert Council under the working group of the Federation Council on energy. — So, for example, “Transneft” has accumulated in their accounts for the Russian astronomical akreditovaneho business amount to 596 billion rubles, paid dividends only out of profits of the parent company, despite the fact that major part of the profit, 143, 146 billion last year, was formed in subsidiary companies”. “Dividends of state-owned companies is the wand, which in the context of the fall in oil prices plugging holes in the Russian budget. From dividend payments by state companies to the state independent pensions, benefits students, all social obligations of the state”, — said Romanchuk.