US, WASHINGTON (ORDO NEWS) — The government of Russian President Vladimir Putin plans to significantly increase incentive measures to support the economy, which has begun to roll towards recession.
The Russian government intends to spend an additional 1 trillion rubles (13.5 billion dollars). This data was obtained from two people familiar with the situation who asked not to give their names, as the discussion is still ongoing. According to reports, part of this money will be used to subsidize wages to people who are currently not going to work because of self-isolation measures to combat coronavirus.
According to one of the sources, the funds for stimulation will be obtained by increasing borrowings, and will not be taken from a special Russian fund, in which 165 billion dollars have been accumulated for a rainy day. The government’s return to the ruble bond market after a five-week hiatus was in weak demand.
An official representative of the Russian government did not respond to a request for comment.
This plan is by far the most clear evidence that Putin wants to join other world leaders and increase spending so that the economy does not slide into a deep recession. Concern that oil prices may remain low after an almost 50 percent drop this year is causing the Kremlin to be cautious about spending funds accumulated in the funds, despite growing pressure from business and economists.
For several weeks, Russian companies have been lobbying the government for trying to increase support measures, among which there is no direct distribution of funds. Lobbying groups warn that inadequate incentives could lead to massive unemployment, bankruptcy, and a deep economic downturn.
The previous spending plan was only 2% of gross domestic product, although officials and economists called for spending to increase to 10% of GDP.
According to the Central Bank, the government’s decision that most Russians work from home throughout April could reduce economic growth to 1.5% – 2%, while the budget will be reviewed and prepared for an oil price of $ 20 per barrel.
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