Public-private partnership is the foundation of economic development

The history of Russia shows that attempts from outside to limit the development of our country – through bans, restrictions, exorbitant duties – ultimately turn against the authors of the sanctions themselves. One of the striking examples is the development of industrial production, which grew by 4.6% last year, and by 8.5% in the manufacturing industry. At the same time, it is extremely important to prevent a reduction in entrepreneurial and investment activity.

The recent meeting of the Board of Directors of the Bank of Russia with the reduction of the key rate is indicative in this regard. What is important here is not even the size of the key rate (20% is still quite a high value for borrowers in the real sector), but the change in trend.

It is also extremely important to develop tools for attracting private investment in projects that are most important for the country's economy. Several landmark decisions have been made here. Thus, the Bank of Russia in its report declared its readiness to reduce the burden on banks when lending to public-private partnership (PPP) projects. The key condition is that the public party in the project is the state or an entity with a credit rating of at least "A".

Banks are positive about the idea, and business also supports it, since the changes will allow for an increase in the volume of PPP projects. This abbreviation stands for new hospitals and educational institutions, roads and bridges, airports and housing and communal services in cities and regions. Moreover, it is PPP that allows for construction today without excessive burdens on budgets, the current expenditures of which are directed to finance social items.

To help regions and cities, there is also a mandatory examination of PPP initiatives worth RUB 3 billion or more, which will be conducted by VEB.RF. The corresponding decision was prepared by the Ministry of Economic Development of the Russian Federation. For 26 regions, this stage will be voluntary, with its help regional authorities will be able to “check” projects, while relieving themselves of unnecessary financial burden. For subsidized regions and territories, a positive examination by VEB on large PPP initiatives is a mandatory condition. Moreover, what is important is that the criteria and approaches to the assessment are formulated extremely clearly and comprehensively. Along with economic calculations, risk distribution between private and public parties, an independent expert will assess the demand for the future project and social effects, that is, the impact on the lives of ordinary residents of cities and regions.

A detailed examination already at the start of a future project significantly increases its chances of implementation. The industry also benefits from increased transparency. An additional reliability marker for PPP initiatives will become a benchmark for both regions and municipalities, as well as for investors. By the way, their circle may significantly expand in the event of a reduction in the key rate. Both due to banks outside the top 20 in terms of assets (including the largest regional players), and other institutional investors, for example, from among insurance companies.

Expanding the possibilities and areas of application of PPPs (for example, tourism) is the acceleration of projects that form the foundation for growth. They are not only the future of the economy, but also the present - from major infrastructure to the improvement of public spaces - these are orders for local contractors, and jobs, and taxes in local and regional budgets. And focusing on the real needs of people is the best guarantee that the projects will be in demand, and therefore successful.

Authors:

• Pavel Seleznev, Doctor of Political Science