In that article, I explained that the Russian economy is in a knockout. Of course, the economic consequences do not appear by themselves. The Russian economy has many reasons to be weak. I’ll talk about them later. But the reasons for what is happening in the Russian economy exactly right now are largely due to the government’s actions during the first wave of the pandemic. Let’s compare the aid to the people in other countries and in Russia at that time.
The government has taken measures to help businesses and various groups of the population that are most vulnerable during the coronavirus epidemic. The total amount of support exceeds 750 billion euros. This includes the creation of a support fund for large enterprises worth 600 billion euros. Small firms can receive subsidies of up to 15 thousand euros, as well as take unlimited loans. Landlords are prohibited from terminating contracts with tenants who cannot pay rent due to the epidemic. German hospitals also receive over 3 billion euros of support.
Also, Germany is a part of the European Union. So some supports come from there.
In mid-March, it was decided to allocate 37 billion euros to support the economy of the European Union during the pandemic. Of these, 8 billion euros will be distributed among the companies most affected by the coronavirus. Also, a program was launched to repurchase securities worth 750 billion euros to maintain financial stability. Also, the budget deficit limit was canceled, allowing the government to take loans without any restrictions to help business. (but not more than 3% of GDP)
Measures to support business were introduced, including the introduction of loan guarantees in the amount of 330 billion pounds (this is about 400 billion pounds), which is about 15% of the country’s GDP. The maximum loan amount will be increased from £1.2 million to £5 million (from $1.5 million to $6 million). At the same time, a deferral for interest payments is given – the first six months. Small retailers, tourist hotels are exempted from business tax. Residents were given a 3-month grace period for mortgage payments.
South Korea (Korea’s GDP is similar to Russia’s GDP, by the way)
The Korean authorities have allocated about $80 billion to support business. In particular, loans of about $47 billion will be provided to help small and medium-sized enterprises. $16 billion allocated to stabilize the bond market and an equity market support fund created to counter capital flight in the amount of $8.5 billion
What was done in Russia?
Additional payments to families eligible for maternity capital and children under 3 years: 5 thousand rubles per month ($66). The same applies to low-income families with children from 3 to 7 years old;
Increased unemployment benefit (up to 12 thousand rubles) ($157)
Voting for amendments to the Constitution postponed
Tax deferral for small and medium-sized businesses, deferred insurance premiums for micro-enterprises, deferred loans for businesses. Deferred, businesses were not exempted from paying them.
The ability to roll over loans to individuals for free;
The tax on foreign deposits has been increased – from 2 to 15%;
A tax of 13% was introduced on INTEREST on deposits over 1 million rubles.
Vacation was announced. Kind of like paid ones. The business was only forced to pay all expenses, which ultimately leads to economic collapse. Small businesses are not able to pay, so people are ultimately forced to sit without money. And, it turns out, without work. According to statistics, more than 2/3 of the population of Russia has no savings at all. According to Forbes, more than 90% of small businesses will not be able to recover from the crisis. The decision of the state on this matter? Deposit tax!
All supports and payments for children are currently unavailable. Try to get paid, can you? Try to roll over the loan as an individual, what will the bank tell you? “We do not know anything and no instructions have been received”. Getting all those kinds of aid is a bureaucratic hell.
Healthcare has collapsed, hospitals do not have enough protective equipment for doctors, oil has dropped, so the ruble. Instead of firm decisive measures, a “deferral of taxes and some other items that simply do not work” were adopted. Neither direct subsidies, nor direct assistance to the population, nor to the economy, as is done in developed countries. Everything again fell on the shoulders of the long-suffering Russian people. The consequences are obvious.