IMF advises Russia to prolong coronavirus support

RUSSIA / FSU POLITICS - In Brief 26 Nov 2020 by Alex Teddy

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IMF advises Russia to prolong coronavirus support packageOn November 25 the IMF praised Russia's handling of the economic fallout from coronavirus. The IMF suggested that the government show greater liberality in social support spending.The IMF said that Russia's fiscal conservatism had put it in a healthier position to cope with the crisis than most countries. The government stressed the importance of saving foreign currency and reducing debt. The IMF noted that the Russian recovery is jeopardized by the abrupt rise in coronavirus cases. The second wave is twice as bad as the first.The IMF suggested that the government provide financial support for individuals and businesses that are struggling due to coronavirus. Raising unemployment benefit was recommended. 2 million people were laid off 2020. Unemployment is offficially 6.3%. This is regarded as an understatement of the true figure. Tax deferrals, writing off state backed loans for companies and giving emergency support to businesses are all proposed by the IMF.SMEs lament that they received little financial support from the government. They do not usually get cheap loans from the state. The bureaucracy required to get one is nightmarish.Russia's economic support package is about 4% of GDP. In the EU countries it is over 10% in most cases.The IMF suggested that Russia reduce the interest rate. Otherwise recovery will be very sluggish. The interest rate is at 4.25%: the lowest ever.Growth has been an average of 1.5% per annum in recent years. The economy shrunk 4% in 2020 thus far. The IMF estimates it will rebound by 2.5% in 2021 if current policies continue.The USD 360 billion National Projects could raise Russia ...