The Russian authorities have developed a plan to attract the savings of Russians on a large scale to finance long-term investments by the state and business. The government intends to create new investment products, start attracting Russians to invest in them, and sets the task of multiplying Russians' investments in such instruments. The relevant ideas were voiced during a government meeting with Russian President Vladimir Putin, who supported the ideas of the Cabinet of Ministers, Kommersant writes .
The idea was sponsored by Finance Minister Anton Siluanov and First Deputy Prime Minister Andrey Belousov. They are confident that with the help of the proposed initiatives they will be able to solve several problems at once: restore confidence in the Russian stock market among citizens, provide them with instruments with high guarantees and increased profitability, and also provide the economy with the so-called “long money” that can be invested in long-term projects with a long payback period. With the help of the Russians, the authorities expect to replace the funds of foreign investors who left the Russian market after the start of a full-scale invasion of Ukraine.
“These are new opportunities for our people. Not just to keep money under your pillow or in the bank, but to give you the opportunity to securely invest money and use additional opportunities to generate income. One of the main tasks for the development of the financial market is to enable our citizens to invest in new instruments and receive a good income,” the Minister of Finance said.
The government is betting on three instruments. The first is long-term savings with government co-financing. Technically, it will be similar to a bank deposit, but due to co-financing from the state, the instrument should be more profitable than a regular deposit, Siluanov promises. According to him, such a tool is suitable for "cautious investors."
The second tool is individual investment accounts (IIS-3) of the third type, on which they can buy shares of Russian issuers (Sberbank, Gazprom, Rosneft, etc.), receive a tax deduction, and income from the sale of assets will not be subject to personal income tax . It will also be possible to buy government and corporate bonds of Russian issuers on this account. Thus, citizens will be able to finance the expenses of the authorities and help domestic businesses in the conditions of a closed foreign capital market.
The third instrument is long-term life insurance. Here, the Ministry of Finance allegedly turned to the Soviet experience, when a citizen could insure his health, and the funds spent on insurance, if not used, are invested and bring income to the client. Interest on the policy is paid after the expiration of the policy. Siluanov promises that the profitability of these instruments will also be higher than traditional deposits. Andrei Belousov also noted that tax incentives are provided for all new types of instruments, in particular, they plan to exempt them from personal income tax.
According to the Deputy Prime Minister, about 8% of Russians can be attracted to the stock market from under the mattresses (about 12 trillion rubles, if you count from the nominal value). At the same time, the authorities do not talk about the riskiness of the proposed instruments. The securities of Russian issuers became extremely volatile during the war. For example, Gazprom during the year showed several record falls on the stock exchange, and twice this volatility was caused by the government's decision on the issue of dividends of the state-owned company. For a long time, the life insurance instrument was considered by experts to be close to fraudulent, since the funds were transferred to the management of a non-state pension fund (NPF), but no profitability was guaranteed.
Finally, the Russian market collapsed by 43% in 2022, and the outflow of capital from the country amounted to $217 billion. Against the backdrop of Vladimir Putin’s decisions to unleash a war with Ukraine, the Russian stock market collapsed more than twice. The Moscow Exchange Index on February 21 was at the level of 3460 points, and on February 24 it fell to the level of 1681 points. At the moment, the Russian authorities are experiencing serious difficulties with the sources of financing public spending. The rate of increase in the budget deficit is growing at a record pace since the 90s.