ALEKSEY VEDEV: DETAILS AND TOOLS OF SUPPORT REMAIN UNCLEAR AGAINST OVERAL POSITIVE MOOD resulted from PROMPT RESPONSE
Currently, the coronavirus epidemic is in the focus of special attention. The Government of the Russian Federation has promptly developed priority measures aimed at minimizing damage from the spread of the coronavirus pandemic and stabilizing the financial sustainability of the economy.
Aleksey Vedev, Head of Financial Studies Department of the Gaidar Institute, shared his thoughts on the effectiveness of anti-crisis measures with Invest Foresight.
The expert noted: “It is a very positive fact that the Government is developing specific measures to support the economy and does not pretend that there is no crisis at all and everything that happens is a temporary phenomenon”.
The coronavirus epidemic has seriously affected the tourism business. In this regard, the Government proposed introducing tax holidays for airlines and travel agencies as well as simplifying procedures for domestic and foreign supplies. State support will embrace the SME segment accordingly. It is suggested to provide them with subsidies, grant a deferral of rental payments and the possibility to refinance loans. In order to support the population, advance payments on sick leave were announced for citizens under quarantine.
However, according to expert, “details, tools of support remain unclear against overall positive mood resulted fr om prompt response”.
“Thus, for instance, it is not clear how fast and simple enterprises and industries or population will have the opportunity to borrow loans when they faced challenges, what the interest rates and pledges will look like. It is obvious that economic authorities, primarily, the Central Bank, will press financial agents aiming to most appropriately simplify support procedures. It is even more so because these agents are all “their own friendly” state banks. Last but not the least, by all means, they will undertake concessional financing even greater against the obligations on preferential lending. It is clear that they will not remain at a loss. Aleksey Vedev noted: “The implementation of logistics measures cause questions. It is not obvious how the “green corridor” required for delivery of essential goods will operate against almost total border closure. The idea is clear, but taking into account our nimbleness, I doubt that it will work efficiently”.
However, the major issue is the depth and duration of this crisis, probability and intensity of occurrence of potential points of disaster, which will have to be “extinguished” and, consequently, the amount of finances required for these purposes.
The expert of the Gaidar Institute concluded: “The major issue is that it is not clear wh ere the bottom of this crisis is and what are the parameters that we are facing. In addition to coronavirus, this is primarily an oil prices shock. Therefore, it seems that the amount of Rb 300 billion that has been currently reserved for stopping the effects of the crisis is fairly limited and I am confident that it will be increased. It is also unclear how much this crisis lends itself to being flooded with money by analogy with 2009".
The expert noted: “It is a very positive fact that the Government is developing specific measures to support the economy and does not pretend that there is no crisis at all and everything that happens is a temporary phenomenon”.
The coronavirus epidemic has seriously affected the tourism business. In this regard, the Government proposed introducing tax holidays for airlines and travel agencies as well as simplifying procedures for domestic and foreign supplies. State support will embrace the SME segment accordingly. It is suggested to provide them with subsidies, grant a deferral of rental payments and the possibility to refinance loans. In order to support the population, advance payments on sick leave were announced for citizens under quarantine.
However, according to expert, “details, tools of support remain unclear against overall positive mood resulted fr om prompt response”.
“Thus, for instance, it is not clear how fast and simple enterprises and industries or population will have the opportunity to borrow loans when they faced challenges, what the interest rates and pledges will look like. It is obvious that economic authorities, primarily, the Central Bank, will press financial agents aiming to most appropriately simplify support procedures. It is even more so because these agents are all “their own friendly” state banks. Last but not the least, by all means, they will undertake concessional financing even greater against the obligations on preferential lending. It is clear that they will not remain at a loss. Aleksey Vedev noted: “The implementation of logistics measures cause questions. It is not obvious how the “green corridor” required for delivery of essential goods will operate against almost total border closure. The idea is clear, but taking into account our nimbleness, I doubt that it will work efficiently”.
However, the major issue is the depth and duration of this crisis, probability and intensity of occurrence of potential points of disaster, which will have to be “extinguished” and, consequently, the amount of finances required for these purposes.
The expert of the Gaidar Institute concluded: “The major issue is that it is not clear wh ere the bottom of this crisis is and what are the parameters that we are facing. In addition to coronavirus, this is primarily an oil prices shock. Therefore, it seems that the amount of Rb 300 billion that has been currently reserved for stopping the effects of the crisis is fairly limited and I am confident that it will be increased. It is also unclear how much this crisis lends itself to being flooded with money by analogy with 2009".