Russian Ministry Says 668,000 Small and Mid-Sized Firms have Closed in Last Year, Experts Agree, but Kremlin Denies It

Paul Goble

            Staunton, October 27 – The Russian Ministry for Economic Development says that over the last year, 668,000 small and mid-sized firms have gone out of business or gone into the shadow economy. Businesses and experts agree, but Vladimir Putin’s press secretary says the figures aren’t true as they contradict what the Kremlin has heard.

            According to the ministry, the firms ended their status as legal entities because of rising taxes and regulations (iz.ru/935870/roza-almakunova/bez-iurlitca-v-rossii-za-god-zakrylos-pochti-700-tys-predpriiatii).  Businessmen and analysts agree both with the number and the cause, but the Kremlin has dug in and denied that there has been such a contraction.

            Between August 2018 and August 2019, the ministry said, the number of firms that had ceased to exist as a result of reorganization, liquidation, bankruptcy and unspecified other causes hit the major urban centers hardest (where there are the most such firms). Only in one federal subject – Chukotka – was there an expansion.

            Over the last four years, the total number of firms in Russia has fallen by 5.2 percent; and there are now only 2.4 million registered ones in the country. Businessmen and analysts say that they believe that the decline has been at least that much, and they blame it on taxes and regulation  (zrpress.ru/business/primorje_25.10.2019_96165_biznes-vynuzhdajut-ujti-v-ten-ili-razoritsja.html).

            Andrey Bunich, head of the Union of Entrepreneurs and Rentiers of Russia, says that ever fewer people want to try to make a go of it in the current economic situation, especially as the government is not helping but hurting business (newizv.ru/news/economy/28-10-2019/v-kremle-otritsayut-zakrytie-v-rf-700-tys-kompaniy-srednego-i-malogo-biznesa).

            But Vladimir Putin’s spokesman Dmitry Peskov, after first saying that it hadn’t seen the data and would have to check, said that the ministry’s numbers were inaccurate and do not reflect the situation on the ground as seen from the Kremlin (ria.ru/20191025/1560223705.html and https://www.rbc.ru/business/28/10/2019/5db6c6c19a794753c4aa8cd5).