One of Russia’s Richest Men Says Economy Has Yet to Hit Bottom

Vladimir Potanin, one of Russia’s richest men, said the country’s economy has yet to hit bottom, with a shortage of investment remaining the biggest challenge.

“We cannot yet say that we have passed the lowest point,” Potanin, the biggest shareholder and head of MMC Norilsk Nickel PJSC, Russia’s largest miner, said in an interview with RBC TV on Saturday.

The tycoon acknowledged the Moscow government is making “titanic efforts” to balance the budget, potentially creating conditions for the central bank to ease monetary policy and for other measures aimed at reviving the economy. Still, he warned that a shortage of investments is the biggest challenge now and tax hikes, including on miners, can make the situation worse.

Russia’s economy ministry forecasts growth of just 0.6% this year. The government faces a widening budget deficit as it channels more resources toward the war in Ukraine. Financing that burden is forcing Moscow to draw more heavily on almost every other part of the economy through higher taxes, fees and other revenue sources.

For the miners, the government introduced a windfall tax of as much as 30% of “excess” profits for 2027-2029, with Norilsk Nickel one of the companies hit the hardest.

This tax may further hurt big companies’ investment plans, according to Potanin. “We understand the need for an additional fiscal burden. But that burden should come exclusively from profits,” Potanin said. Uncertainty over tax policy and the resulting difficulty of planning investments may be an even bigger barrier to investment than high interest rates or a lack of capital, he added.

The comments from Potanin, Russia’s third-richest billionaire with a fortune of $22 billion according to the Bloomberg Billionaires Index, reflect a growing rift between the largest companies and the government, which needs to ensure the country can continue funding the war.

Read: Russian Budget Plans Three Years of Record War Spending

Businesses had backed tax reforms two years ago on the understanding that tax policy would remain stable through 2030, but that promise had not been upheld, Potanin said.