ALEXEI VEDEV: DIRECT PAYMENTS TO PEOPLE IS QUITE A POSITIVE MEASURE
In his interview to Media.Az, Alexei Vedev, D.Sc. Economics , Head of the Financial Studies Department, Gaidar Institute commented on the prospects of introduction of the universal basic income and said in what post-Soviet countries it could be feasible.
– After the outbreak of the COVID-19 pandemic and the lockdown, the basic income, though a temporary one, has become a reality. In Azerbaijan, they pay out 190 manats a month. It is not a big sum of money, but this measure is expected to cover as many temporary unemployed as possible. In the US, where the level of prices is different the authorities send residents checks for $1200; in Japan people receive $930. Is the introduction of the universal basic income really important, at least during the lockdown?
– There are a few points here. First, it depends on how much money each concrete country can afford to pay out. Second, it is necessary to take into account the extent of the inflationary risk. Overall, direct payments to people are quite a positive measure which permits to reduce income losses. However, each country needs a custom-tailored approach in terms of direct payments and the amount thereof. One cannot generalize and say that this measure fits all countries which should pay a universal basic income to the population.
– Speaking about the post-Soviet space, what countries are able to make any direct payments to people?
– Azerbaijan, Kazakhstan and Russia. And, probably, Turkmenistan, as well. These countries specialize on exports of primary products and they have such financial resources.
– Some European countries have already experimented with the universal basic income. Does not it create problems in the economy?
– At present, this measure will have a positive effect because it is going to mitigate a slump in the economy. And, certainly, it is a temporary measure which is applied only during the lockdown. Later, these payments will have to be scaled down. But subsidies do promote domestic demand and consumption. It has a positive effect on the economy. But I agree that only a few countries can afford such payments in this tough time.
According to Alexei Vedev, “for making investments into the infrastructure other sources can be found. For example, building up of the state debt, optimization and redistribution of resources. So far, there have been no problems with demand on OFZ securities. Certainly, there are concerns because funds are leaving the emerging markets. However, the US and Europe have started such a large-scale quantitative easing program that sooner or later investors will get risk appetite and the money will definitely come back to Russia. But it is feasible only after the lifting of lockdown measures when the economy is able to receive these investments”, concludes the expert of the Gaidar Institute.
– There are a few points here. First, it depends on how much money each concrete country can afford to pay out. Second, it is necessary to take into account the extent of the inflationary risk. Overall, direct payments to people are quite a positive measure which permits to reduce income losses. However, each country needs a custom-tailored approach in terms of direct payments and the amount thereof. One cannot generalize and say that this measure fits all countries which should pay a universal basic income to the population.
– Speaking about the post-Soviet space, what countries are able to make any direct payments to people?
– Azerbaijan, Kazakhstan and Russia. And, probably, Turkmenistan, as well. These countries specialize on exports of primary products and they have such financial resources.
– Some European countries have already experimented with the universal basic income. Does not it create problems in the economy?
– At present, this measure will have a positive effect because it is going to mitigate a slump in the economy. And, certainly, it is a temporary measure which is applied only during the lockdown. Later, these payments will have to be scaled down. But subsidies do promote domestic demand and consumption. It has a positive effect on the economy. But I agree that only a few countries can afford such payments in this tough time.
According to Alexei Vedev, “for making investments into the infrastructure other sources can be found. For example, building up of the state debt, optimization and redistribution of resources. So far, there have been no problems with demand on OFZ securities. Certainly, there are concerns because funds are leaving the emerging markets. However, the US and Europe have started such a large-scale quantitative easing program that sooner or later investors will get risk appetite and the money will definitely come back to Russia. But it is feasible only after the lifting of lockdown measures when the economy is able to receive these investments”, concludes the expert of the Gaidar Institute.