The Russian government may need to drastically ramp up stimulus spending, as the economic crisis triggered by Covid-19 could leave up to 8 million Russians out of work, warned the head of the parliamentary finance oversight body.
“According to forecasts, during this crisis the number of unemployed people in Russia will rise from 2.5 million to 8 million for some time,” Alexei Kudrin, told RBC business outlet on Monday. The former Finance minister is now the head of the Accounts Chamber, the parliamentary body charged with financial oversight.
Kudrin added that the jobless rate might only drop once the economy rebounds, with the rise in demand and consumption and businesses coming back to normal.
Russia should look back at the measures the government took to tackle the 2008-2009 financial crisis to offset the aftermath of the current economic troubles, the Kudrin added.
He noted that during the previous crisis the country unveiled massive financial assistance to help businesses stay afloat. While it did not help to avoid layoffs, many companies , even the weaker ones – survived.
Given the circumstances, Russia may need to increase aid for businesses up to 3 trillion rubles ($40.8 billion), according to Kudrin.
On Monday, the Russian government said it is considering additional measures to support the economy, which could be unveiled by the end of this week. Prime Minister Mikhail Mishustin said that companies working in sectors most affected by the coronavirus crisis will be able to delay tax payments through the end of 2021 in some cases.
The Russian government may roll out about 1 trillion rubles ($13.6 billion) in new stimulus measures, Bloomberg reported earlier. Some funds could be spent to subsidize salaries of workers forced to stay at home due to quarantine measures.
Russia’s cabinet has so far reserved 1.4 trillion rubles (around $19 billion) to stimulate the economy, caught between the spread of the deadly virus and oil market volatility.
Kudrin had warned earlier that this might not be enough, even though the support measures currently being discussed amount to five percent of GDP. According to him, the country needs at least seven percent.
As of Monday, over 18,000 people in Russia have tested positive for the virus and 148 people have died. The rapid spread of the disease has prompted the government to enforce mandatory self-isolation regimes in most regions, including in the capital.
Earlier this month, President Vladimir Putin said that the nationwide paid leave would be extended to April 30, while non-essential businesses – including shopping malls, cinemas and gyms – remain shuttered in most parts of the country affected by the pandemic.
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