Analyst Razuvaev spoke out about the reset of Soviet deposits

The government intends to extend the suspension of payments to Russians on Soviet deposits until January 1, 2027. The corresponding document is posted in the State Duma’s electronic database. The step is quite expected: payments on savings of citizens placed in Sberbank before June 20, 1991 have been postponed annually since 2003 due to a lack of money in the budget. Why doesn’t the state completely renounce its obligations in this case and is it possible in principle to fulfill them? MK addressed these questions to Alexander Razuvaev, a member of the supervisory board of the Guild of Financial Analysts and Risk Managers.

Let us recall that in 1999 the law “On the basic cost of the necessary social set” was adopted, guaranteeing the restoration and safety of the savings of citizens of the USSR created before June 20, 1991. Since 2003, the start date for compensation payments has been postponed annually due to the lack of “sources of financial support and the lack of legislative scope for the application of the debt ruble.” However, the amount of funds that need to be paid to Russians for these government obligations is constantly growing. Next year, the amount of money to repay them, translated into current Russian realities, will already be 61.8 trillion rubles, in 2025 – 64.2 trillion rubles, and in 2026 – 66.8 trillion rubles. For comparison, let us recall that the entire Russian GDP for 2022 amounted to just over 150 trillion rubles. It is clear that no one will ever agree to give almost half of this money to pay off debts from the last century.

Where do the multi-trillion-dollar figures of Soviet deposit debts come from? The fact is that according to the 1995 law “On the restoration and protection of savings of citizens of the Russian Federation,” the fulfillment of payment obligations is provided for by transferring citizens’ savings into targeted debt obligations of the Russian Federation using the debt ruble. Its cost is determined “based on the change in the ratio of the control value of the required social set and the basic cost of this set and is applied when using and servicing the target debt obligations of the Russian Federation.” This is directly stated in the explanatory note to the normative act. Federal Law No. 21-FZ sets the cost of such a set at 464 USSR rubles.

The issue of paying out deposits from Soviet savings books is regularly raised in the State Duma. This is usually done by parties that do not have a parliamentary majority. The last such initiative appeared in 2020, when the total amount of targeted government debt obligations reached 45.4 trillion rubles. Then a number of opposition deputies proposed to begin gradual payments to Russians – 2.5% of the total amount of the state’s debt to citizens (or 1.135 trillion rubles) annually. However, the initiative was rejected by the State Duma Committee on the Financial Market.

— Who is to blame for the current situation with Soviet deposits?

— Soviet contributions are a very painful story. The fact that they “burned out” in the fire of hyperinflation 30 years ago is the main reason for modern Russian poverty. The blame for this lies entirely with the last leader of the USSR, Mikhail Gorbachev and his team: at the end of their reign, they printed too much “empty” money, unbacked by anything. The first President of Russia, Boris Yeltsin, and the liberal reformer, former Minister of Finance and Economy of the Russian Federation, Yegor Gaidar, simply released prices and equalized the commodity and money supply. Well, to this day, after so many decades, we have a situation where it is simply impossible to resolve the issue of paying Soviet deposits to Russians head-on

— If it is so complicated, then why don’t the authorities simply abandon these obligations? It is unlikely that such a decision will cause any powerful wave of social protests today…

— The government does not reset this story because it is politically unprofitable. Of course, there is no money in the budget for fair compensation for citizens’ savings before 1991. Soviet deposits amount to a little more than 300 billion Soviet rubles.

— How much is this in modern Russian realities?

— If we count directly, according to purchasing power parity, then 1 Soviet ruble is 300-400 of the current ones. But I would take a ratio of 1 to 100. The current Russian ruble is, so to speak, a more respected currency. There is no commodity shortage in Russia, there is a developed stock and bond market, the modern ruble is freely exchanged for the dollar, euro, and yuan. The current ruble is full-fledged money. The Soviet steering wheel is something between money and coupons.

— Okay, but since the authorities do not refuse these obligations, how, in principle, could it be possible to return deposits from Soviet savings books to Russians and restore justice?

– There are several options. In particular, one of the solutions to the problem was found 25 years ago by the Center for Financial Research at the Institute of Economics of the Russian Academy of Sciences, where I then worked. It was proposed to issue perpetual bonds with coupon payments once a year on the deposits of USSR citizens created before 1991. The yield on them should have been half or 75% of the key rate of the Central Bank of the Russian Federation. If a citizen wants to receive all the money at once, he will be able to sell his bonds on the Moscow Exchange. But I don’t like this idea. Yes, in this scheme you will not have to pay the entire debt, but only the coupon, but this is still a significant burden on the budget. In addition, Russia’s sovereign debt will increase sharply, and we are so proud of the fact that it is small by world standards.

– And what do you suggest?

“I believe that as compensation we can use a stake in key state-owned companies in the energy and financial sectors – market leaders, whose names are well known to everyone. Control over these companies and the processes of trading their shares on the stock exchange can be left with the government through the “golden share” mechanism, and the money can be sent to the Russians. Let me remind you that a “golden share” allows you to veto, that is, block any decisions made at a meeting of shareholders, have a majority on the company’s board of directors and gives a whole range of other unique rights. As a result, we will have an option where the money is paid to the Russians, and control remains with the state. In this case, we will get a lot of small investors, the development of the stock market, the flourishing of financial services, because brokers will also receive additional profits, and all Russians will be interested in the growth of quotes of domestic “blue chips”.

— Are there any shortcomings in this scheme?

— Of course, its main disadvantage is that dividends from the best Russian companies will now go not to the federal budget, but to the pockets of ordinary Russians. But I am sure that the state treasury will survive this. As we see, our budget deficit is now covered by devaluation. In addition, if necessary, additional privatization could be launched – a number of large companies in the nuclear or transport sector could be completely or partially sold to the state.

– Why then does no one in the government even want to come up with anything?

— Yes, it’s simple: officials don’t need it. They are already doing well. They do their routine work, and no one demands creativity from them. At least on the issue of old debts on Soviet deposits. It’s just that this problem is transferred without any fuss from one year to another.