Note: Current as of 23rd March 2020 - Working Draft
(Source - From Publication on the Internet)
Key Policy Responses
increased compensation for frontline medical staff as well as health and safety inspectors;
individuals under quarantine to receive sick leave benefits and sick leave pay to equal at least the minimum wage until the end of 2020;
unemployment benefits to equal at least the minimum wage for three months;
all children up to 3 years of age to receive an additional lumpsum benefit for 3 months, starting in April; all children 3-15 years of age eligible for a one-time lumpsum benefit; all families with children to get an additional lumpsum benefit for each child for 3 months if parents lose jobs;
interest rate subsidies for SMEs and systemically important enterprises;
tax deferrals for most affected companies on most taxes; (
deferrals on social contributions for SMEs in affected sectors for 6 months;
social contributions by SMEs on wages in excess of the minimum wage permanently reduced from 30 to 15 percent;
a tax holiday on all taxes (excluding VAT) and social contributions for Q2 for SMEs, sole proprietors, and NGOs providing social services;
registered self-employed will be refunded their taxes for 2019 and get a discount on their 2020 taxes;
sole proprietors will get a discount on their social contributions;
deferrals on rent payments to all levels of government until the end of the year plus zero rent to the federal government for three months for SMEs in affected sectors;
budget grants for SMEs in affected industries to cover salaries at the rate of one minimum salary per employee for two months plus subsidized and forgivable loans for all enterprises in affected industries to pay minimum wages for 6 months;
zero import duties for pharmaceuticals and medical supplies and equipment; and guaranteed loans to SMEs and affected industries. The total cost of the fiscal package is currently estimated at 2.9 percent of GDP.
In Summary Russian Economy has...
GDP grew by 1.6 percent in Q1 of 2020, compared to a year earlier.
The total cost of the fiscal package is currently estimated at 2.9 percent of GDP.
As reported by bne IntelliNews, so far the government has rolled out two economic support packages, worth RUB3.1 trillion ($42.1bn) or 2.8% of GDP, and is preparing a third package.
Minister of Finance Anton Siluanov has argued that as the government is not cutting budget spending this year despite the slump in oil prices, the actual amount of state support is at 6.5% of GDP.
The Russian government will allocate over RUB80bn ($1.1bn) to SMEs affected by the epidemic, RBC business portal reported citing a decree signed by Deputy Prime Minister Andrei Belousov.
MONETARY AND MACRO-FINANCIAL
On April 24, the CBR cut the policy rate by 50 bps to 5.5 percent. The Central Bank of Russia (CBR) started selling FX reserves from the National Welfare Fund on March 10, reflecting the fall in oil prices below the reference price under the fiscal rule and later for the purchase of Sberbank by the government. It also increased the limit on its FX swap operations. The CBR has temporarily introduced a long-term refinancing instrument (long-term repos are planned for one month and one year).
CBR has introduced temporary regulatory easing for banks intended to help corporate borrowers, and more favorable treatment for FX loans issued to certain sectors. Forbearance as regards provisioning for restructured corporate and SME loans will apply to all sectors, not only affected by COVID. The CBR has introduced a new RUB 500bn facility for SME lending (of the total limit of 500 billion rubles, in addition to the already allocated 150 billion rubles to provide loans to SMEs for urgent needs to support and maintain employment, another 50 billion rubles will be allocated for similar purposes for borrowers who do not have the status of SMEs). On April 27, the interest rate on CBR loans aimed at supporting lending to SMEs, including for urgent needs to support and maintain employment was reduced from 4.0 to 3.5 percent.
Banks have been allowed to value securities at their price from March 1. FX operations can also be valued at the exchange rate of March 1, except for those on open forex positions. The Deposit Insurance Fund contribution will be reduced from 0.15 percent to 0.1 percent through end-2020. Also, the CBR approved measures to ease liquidity regulations for systemically important credit institutions. A set of measures was taken to protect retail borrowers suffering from the pandemic. Parliament approved a law that guarantees the possibility for affected citizens and SMEs to receive deferrals of loan payments for up to six months. Banks are allowed not to classify such loans as restructured for loss provisioning purposes until September 30, 2020. Measures for households include the cancelation of add-ons to risk weights for mortgage loans issued before April 1.
Other support measures to the financial sector included measures to ensure the availability of services of non-bank financial institutions and to promote remote customer services. Also, measures have been taken in the field of AML/CFT and currency control.
Further more the
April’s lockdown has cost the Russian economy up to 2% of its GDP growth this year, or about $150mn per week, and growth wasn't going to be that strong to start with, the Central Bank of Russia (CBR) said on May 6.
Russia plans to double state borrowings, as it expects at least a 5% fall in GDP this year, Siluanov told Vedomosti this week.
Budget revenues are expected to fall by RUB4 trillion from a total of RUB20 trillion planned, with reduced revenues from oil and gas accounting for RUB1.5 trillion of this by themselves. That will leave the budget with a 4% deficit that can be covered by the NWF. Russia ran a budget surplus of 1.8% of GDP last year and had been anticipating a 2020 budget surplus of 0.8% of GDP before the crisis hit.
The Ministry of Finance will use some money from the NWF to pay for non-budget related items, such as supporting the social sphere, but it also clearly intends to keep this spending to a minimum. And last month, the ministry used NWF funds to buy a controlling stake in Sberbank from the CBR, leaving about RUB9 trillion of liquid assets in the fund.