Tuesday, December 25, 2018

Russia’s Elderly Forced to Take On Ever More Debt

Paul Goble

            Staunton, December 24 – Like other Russians seeking to maintain their standard of living or at least prevent it from declining faster, pensioners in that country are assuming debt; but they are doing so at such a rapid rate – experts now speak of “a credit boom” among the elderly – that some worry they will not be able to pay it back without taking out new loans.

            That puts some pensioners on the road to credit slavery in which they will be forced to spend an ever larger portion of their small incomes which on average are less than a third of the incomes of those of working age on debt service, something that will be increasingly difficult as other costs rise.

            During the first ten months of 2018, for example, the United Credit Bureau of Russia reported that pensioners in that country assumed 403.3 billion rubles (almost six billion US dollars) in new debt, 42 percent more than they took on during the same period a year (forum-msk.org/material/economic/15284513.html).

            Banks are ready to give the pensioners consumer loans because few of Russia’s elderly have mortgages, because they have incomes that however small are unlikely to get smaller, and because they are historically more ready to pay them back than some younger groups.  But whether they can handle such a dramatic increase in debt remains to be seen.

            Aleksey Volkov of the National Bureau of Credit History says that bankers are betting they can because the size of the loans given to pensioners is much smaller and because older borrowers traditionally are more committed to paying back what they owe than are many younger ones.

            Caught in this trap, some of the elderly may turn to their children for assistance; but many will simply cut back, forced to pay back loans rather than spend money on basic needs like medicine and food.  To the extent that happens, the economic crisis in Russia will hit them harder and sooner than almost any other age group except perhaps the very young.


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