Foreign companies exiting Russia are massively boosting Moscow’s finances this year — but not by choice
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- Foreign companies exiting Russia have paid $387 million to the country’s budget so far this year.
- Russia has made it tough for firms to leave the market.
- Russia’s economy has remained driven by defense and government spending.
Foreign companies exiting Russia are boosting Moscow’s finances — but not by choice.
Departing companies have already paid 35.7 billion rubles, or $387 million, to Russia’s budget as of March 15, Russia’s RBC business daily reported on Wednesday, citing official data.
That’s 17 times more than the 2.1 billion rubles Russia had expected for the whole of 2024, per RBC. The report did not state how many companies have left this so far this year.
Russia collected 116.5 billion rubles from departing companies in 2023, according to the outlet.
Thousands of foreign companies pledged to leave Russia after it started the war in Ukraine. However, as of Wednesday, just 373 of them have made a complete exit since the war started, according to a count by the Kyiv School of Economics. Another 500 companies are in the process of withdrawing from the country, while another 704 companies have suspended their operations.
As Business Insider reported in December, many of the biggest household names — companies like McDonald’s, Starbucks, and Ikea — have already left Russia. After an initial rush of exits at the beginning of the war, companies have been pulling out of Russia at a much slower pace.
That’s intentional, on the Russian government’s part: Moscow has been making it increasingly difficult for foreign companies to leave.
For a start, companies that wish to leave must be approved by the government. Companies operating in strategic sectors, such as energy and banking, need President Vladimir Putin’s personal signoff.
The Russian government has also introduced a series of steep hurdles to the exit process, such as demanding companies sell their assets at a 50% discount and pay at least 10% of their sale proceeds to the federal budget. Washington has called such payments an “exit tax.”
That means companies make a significant contribution to the Russian economy on their way out. The problem is that remaining in Russia also means contributing to Russia’s resilient wartime economy.
Russia’s GDP grew 3.6% in 2023. The International Monetary Fund expects its economy to grow 2.6% this year. Unemployment is around a record low, and wages are soaring.
But defense and government spending has driven much of Russia’s economic growth, which means it may not be translating to affluence for many Russians on the ground dealing with inflation is running hot at 7.7% in February.
Among the major foreign companies still operating in Russia are Nestlé, Unilever, and Mondelez.
