CBR worried about growing personal debt

RUSSIA / FSU POLITICS - In Brief 10 Apr 2019 by Alex Teddy
The first deputy of the Bank of Russia (CBR) has voiced her fear that excessive personal and company debt is holding the economy back. Ksenia Yudaeva said that the issue seems to be a permanent one and exacerbating social problems. In 2015 many salaries were slashed due to a sharp economic contraction and the fall of the RUR. Many people took on debt to maintain their lifestyles. Although the economy has recovered debt is becoming a way of life. In 2017 statistics prove that debt grew faster than incomes. Many incomes are stagnant in real terms. The government is concerned about this. Some unscrupulous companies are pushing debt - hiring people to advertise immediate unsecured loans on the street. These are available to any citizen of Russia or Belarus. Easy credit might be fueling inflation. The CBR has been obliged to raise interest rates but retail lending is not abating. There is a distinct possibility of an overheating economy. In 2018 people owed their banks USD 231 billion. That was a 22% increase in one year! In March this year the debt burden reached 10% which is almost a historic high. The non-mortgage debt to salary ratio is now 130%.The debt issue is manageable for the moment. If the country fell into recession and many people defaulted on their loans this would be a serious headache for small business and some banks.

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