Russia to Tailor Dividend Payout Plans for Each State Company

Russia’s government plans to set dividend policies individally for each state-controlled company as the Finance Ministry works out a deal to boost budget revenue and attract investors.

“The decision was made to develop a dividend policy for each company, taking into account its specific situation,” Finance Minister Anton Siluanov said in an interview in Moscow after a meeting led by President Vladimir Putin on economic stimulus measures last week.

The world’s largest energy exporter is seeking to balance its budget after Putin pledged to boost social spending during his campaign for a third term in Kremlin. Russia will face its biggest budget strains starting from 2016 and needs to find new ways to boost fiscal revenues, Siluanov told officials after Putin’s annual budget address on June 13. Russia had planned to close the gap by 2015.

“The Economy and Finance Ministries, along with the ministries overseeing the specific industry, should calculate the amount of dividends to be paid by each company, preferably, for future years,” Siluanov said.

The Finance Ministry has been pushing to increase payouts by state companies to 35 percent of net income from 25 percent, battling opposition from the Economy Ministry. OAO Rosneft, the world’s biggest oil producer by output, pledged last year to disburse 25 percent of profit according to international accounting standards.

‘Additional Funds’

Higher dividend payouts “will raise the market value of the companies and provide additional budget funds,” Siluanov said. “The funds received may be channeled into state investments.”

Russia may raise the payout ratio for state companies by 2015 if the economy is stable and shows “good growth rates,” First Deputy Prime Minister Igor Shuvalov said May 23. The first step is to get the companies to pay out at least a quarter of earnings under Russian accounting standards and then to shift them to International Financial Reporting Standards.

“We’ve reached an understanding that companies reporting under IFRS must pay dividends under IFRS,” Siluanov said.

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