GEORGY MALGINOV ON REFORMATTING THE “FEDERAL PROPERTY MANAGEMENT” STATE PROGRAM
Amid dramatic developments of the past few months, an important novation related to the state property policy remained unnoticed. The “Federal Property Management” state program which was in effect since 2013 ceased to exist as an individual document. The program was made up of two subprograms: “Upgrading of the Efficiency of Management of State Property and Privatization” and “Management of the State Material Reserve” with the latter being the main recipient of funding.
By Resolution No.376 of March 31, 2020 of the Government of the Russian Federation, subprogram Zh “Federal Property Management” was included into the “Economic Development and Innovation-Driven Economy” state program. The executive manager of the subprogram is the Ministry of Finance of the Russian Federation, while the participant is Rosimuschestvo which is supervised by the Ministry of Finance in compliance with the pattern of the Russian government approved early this year. The subprogram is meant for the period of five years (until the end of 2024). The volume of federal budget allocations for the entire period of implementation thereof amounts to Rb 21.2bn. It is divided into comparable yearly financing of Rb 4152.3m in 2020 to Rb 4282.5m in 2023–2024 (Rb4204.8m in 2021 and Rb 4272.9m in 2022). However, it is to be remembered that only planed volumes of funding are meant here and not the actual ones determined by the federal budget situation which is burdened by unexpected large anti-crisis expenditures.
It is declared that the subprogram is aimed at boosting the efficiency of federal property management and its targets are as follows: (1) establishment of the comprehensive system of accounting and management of federal property or any other property turned into the public ownership or withdrawn in favor of the state, as well as identification of federal property which is used ineffectively or for purposes other than that intended; (2) increasing of the number of properties of the state treasury of the Russian Federation and land plots involved in civil law relations and preservation of federal property assets limited in the turnover; (3) carrying out of corporate control over implementation of the objectives specified in program documents of companies and unitary enterprises and optimization thereof.
The expected results of the subprogram are as follows:
– establishment by the year 2024 of the relevant integrated database on all federal properties (except for the information attributed to the state secret), as well as properties turned into public ownership and other property withdrawn in favor of the state based on the initial data of other information systems, which have the information on such properties at their disposal, for taking managerial decisions in respect of such properties;
– formation, specification of boundaries of land plots and entry of the data on boundaries of land plots with an area of at least 100 ha into the Single State Register of Real Property (SSRRP) on the annual basis;
– a 60% reduction of the area of state-owned land plots which are not involved into the economic turnover by the year 2024 relative to 2012;
– facilitation of growth in federal budget revenues fr om leasing of federal real property;
– facilitation of the annual increase of minimum 10% in the number of joint-stock companies (JSC) in which over a half of voting shares is owned by the Russian Federation and which received net profit based on the results of the financial year;
– reduction of the state participation in activities of business companies on competitive markets minimum by the year 2024 and facilitation of the annual decrease of at least 10% in the number of entities with state participation;
– establishment of a comprehensive system of identification of federal property which is used ineffectively or for purposes other than that intended by the year2024.
The analysis of goals, objectives and results of the subprogram in a new format points to its consistency with the “Upgrading of the Efficiency of Management of State Property and Privatization” subprogram, a former state program. Also, this is evidenced by the list of 7 target indicators and indices of the new subprogram.
Two of them (the share of properties of the state treasury of the Russian Federation involved in the economic turnover in the total number of properties of the state treasury of the Russian Federation as of the end of the reporting year and the percentage of reduction of the area of land plots of the state treasury of the Russian Federation which are not involved in the economic turnover relative to the area of land plots of the state treasury of the Russian Federation in 2012) coincide completely with the earlier used ones.
Other two indicators are actually a kind of modification thereof. Instead of the indicators of annual reduction of the number of joint-stock companies with state participation and federal state unitary enterprises, the single indicator of the absolute number of entities with state participation was introduced, though the annual reduction of the number of entities with state participation is equal minimum to 10% and presented among the expected results.
Instead of the indicator of correlation of the cost of the sold property turned into public ownership and the appraised value of that property determined for a sale, the index of disposal of the movables turned into the public ownership within a year was introduced (the ratio of the number of positions of the movables in public ownership put out of action as a result of operation thereof (recycling, sale or liquidation) during the reporting year to the overall number of positions of the movables tuned into public ownership, remaining on the balance as of the beginning of the year and received within a year) (%).
Three indicators are new. This refers to the area of land plots in federal ownership in respect of which boundaries are formed and specified and data (ha) were entered into the Uniform State Register of Taxpayers, as well as the shares of sale of equity packages of joint-stock companies and properties of the state treasury subject to sale in compliance with the forecast plan (program) of the privatization (%, in case of absence of direct instructions to use physical indicators).
At the same time, the indicators which define the technological development of managerial processes at the level of the Rosimuschestvo, instruments of management of joint-stock companies with state participation and, strikingly, the budget efficiency (facilitation of revenues from the privatization and payment of dividends on federal packages of equities) have been excluded completely from the new subprogram.
However, not only these aspects alone leave one asking questions about the relevancy of the new “Federal Property Management” program which is being formed in the current situation. The goals – declared among the expected results – of achieving at least a 10% increase in the number of joint-stock companies in which more than a half of voting shares is owned by the Russian Federation and which receive net profits based on the results of the financial year and ensuring growth in federal budget revenues from leasing of federal properties (especially in a situation wh ere privileges for tenants were declared) are out of touch with reality, while the reduction to the minimum by the year 2024 of state participation in business companies operating on competitive markets as the future output of the new subprogram appears to be of an explicitly declarative nature and is in no way underpinned on a regulatory and organizational basis.
Georgy Malginov, Ph.D. Economics, Head of the Ownership and Corporate Governance Department
It is declared that the subprogram is aimed at boosting the efficiency of federal property management and its targets are as follows: (1) establishment of the comprehensive system of accounting and management of federal property or any other property turned into the public ownership or withdrawn in favor of the state, as well as identification of federal property which is used ineffectively or for purposes other than that intended; (2) increasing of the number of properties of the state treasury of the Russian Federation and land plots involved in civil law relations and preservation of federal property assets limited in the turnover; (3) carrying out of corporate control over implementation of the objectives specified in program documents of companies and unitary enterprises and optimization thereof.
The expected results of the subprogram are as follows:
– establishment by the year 2024 of the relevant integrated database on all federal properties (except for the information attributed to the state secret), as well as properties turned into public ownership and other property withdrawn in favor of the state based on the initial data of other information systems, which have the information on such properties at their disposal, for taking managerial decisions in respect of such properties;
– formation, specification of boundaries of land plots and entry of the data on boundaries of land plots with an area of at least 100 ha into the Single State Register of Real Property (SSRRP) on the annual basis;
– a 60% reduction of the area of state-owned land plots which are not involved into the economic turnover by the year 2024 relative to 2012;
– facilitation of growth in federal budget revenues fr om leasing of federal real property;
– facilitation of the annual increase of minimum 10% in the number of joint-stock companies (JSC) in which over a half of voting shares is owned by the Russian Federation and which received net profit based on the results of the financial year;
– reduction of the state participation in activities of business companies on competitive markets minimum by the year 2024 and facilitation of the annual decrease of at least 10% in the number of entities with state participation;
– establishment of a comprehensive system of identification of federal property which is used ineffectively or for purposes other than that intended by the year2024.
The analysis of goals, objectives and results of the subprogram in a new format points to its consistency with the “Upgrading of the Efficiency of Management of State Property and Privatization” subprogram, a former state program. Also, this is evidenced by the list of 7 target indicators and indices of the new subprogram.
Two of them (the share of properties of the state treasury of the Russian Federation involved in the economic turnover in the total number of properties of the state treasury of the Russian Federation as of the end of the reporting year and the percentage of reduction of the area of land plots of the state treasury of the Russian Federation which are not involved in the economic turnover relative to the area of land plots of the state treasury of the Russian Federation in 2012) coincide completely with the earlier used ones.
Other two indicators are actually a kind of modification thereof. Instead of the indicators of annual reduction of the number of joint-stock companies with state participation and federal state unitary enterprises, the single indicator of the absolute number of entities with state participation was introduced, though the annual reduction of the number of entities with state participation is equal minimum to 10% and presented among the expected results.
Instead of the indicator of correlation of the cost of the sold property turned into public ownership and the appraised value of that property determined for a sale, the index of disposal of the movables turned into the public ownership within a year was introduced (the ratio of the number of positions of the movables in public ownership put out of action as a result of operation thereof (recycling, sale or liquidation) during the reporting year to the overall number of positions of the movables tuned into public ownership, remaining on the balance as of the beginning of the year and received within a year) (%).
Three indicators are new. This refers to the area of land plots in federal ownership in respect of which boundaries are formed and specified and data (ha) were entered into the Uniform State Register of Taxpayers, as well as the shares of sale of equity packages of joint-stock companies and properties of the state treasury subject to sale in compliance with the forecast plan (program) of the privatization (%, in case of absence of direct instructions to use physical indicators).
At the same time, the indicators which define the technological development of managerial processes at the level of the Rosimuschestvo, instruments of management of joint-stock companies with state participation and, strikingly, the budget efficiency (facilitation of revenues from the privatization and payment of dividends on federal packages of equities) have been excluded completely from the new subprogram.
However, not only these aspects alone leave one asking questions about the relevancy of the new “Federal Property Management” program which is being formed in the current situation. The goals – declared among the expected results – of achieving at least a 10% increase in the number of joint-stock companies in which more than a half of voting shares is owned by the Russian Federation and which receive net profits based on the results of the financial year and ensuring growth in federal budget revenues from leasing of federal properties (especially in a situation wh ere privileges for tenants were declared) are out of touch with reality, while the reduction to the minimum by the year 2024 of state participation in business companies operating on competitive markets as the future output of the new subprogram appears to be of an explicitly declarative nature and is in no way underpinned on a regulatory and organizational basis.
Georgy Malginov, Ph.D. Economics, Head of the Ownership and Corporate Governance Department