The Russian government is to spend at least 2.34 trillion roubles (approximately €29bn) in an attempt to combat the economic crisis, following a collapse in oil prices and the value of the rouble.
The Russian government is to spend at least 2.34 trillion roubles (approximately €29bn) in an attempt to combat the economic crisis, following a collapse in oil prices and the value of the rouble. As a result of Russia’s involvement in the crisis in Ukraine, the country has also been subject to economic sanctions by many western countries.
Russia will most likely spend a majority of the cash on federal loans, pensions and recapitalising its banks and also make public spending cuts. Over the next three years most spending (not including military and social programmes) will be reduced considerably.
Earlier this month, the International Monetary Fund forecast that Russia’s economy will decrease by 3% this year and 1% in 2016. Russia’s government will spend approximately one trillion roubles to recapitalise banks through the issuance of government bonds. The plan includes a separate scheme to help recapitalise some banks with 250bn roubles, while 300bn roubles will be provided to a state development bank, called Vnesheconombank.
There will be an extra 200bn roubles in state assurances to finance investment projects, and regional governments will get 160bn roubles in federal loans. Simultaneously, the government has proposed public spending cuts of 10% this year and 5% over the next two years. They currently remain unapproved by the Russian parliament.