Staunton, April 26 – At a time when most countries around the world have come up with and begun to implement plans to prevent the coronavirus pandemic from destroying their economies, the Kremlin has not yet elaborated any such anti-crisis program, a failure that opens the way to disaster, according to Academician Abel Aganbegyan.
He made that point in an address to an online conference on fighting the coronavirus without destroying the economy that was organized by the Russian Academy of Economics and State Service (newizv.ru/article/general/26-04-2020/akademik-aganbegyan-v-rossii-do-sih-por-net-nikakoy-antikrizisnoy-programmy).
Aganbegyan who 35 years ago was a close advisor for Soviet leader Mikhail Gorbachev made the following additional points:
The government must support businesses now closed because of anti-pandemic measures. Otherwise, they will cease to pay their employees and go bankrupt. At present, only 63 percent of Russians have any savings and so they will “simply begin to starve.”
“Now, 30 percent of enterprises have stopped and are not paying anything to their employees,” who mostly do not receive unemployment compensation either. The few who do get some of the lowest payments of that kind in the world.
“There is no sense that the government recognizes the depth of the crisis.”
“Twenty million people today in Russia are at the edge of poverty with incomes of less than 12,000 rubles (160 US dollars a month) … 65 percent of the poor are working people.” That makes Russia “unique.” In other countries, the minimum wage brings people out of poverty rather than keeps them in it.
Russians pay a higher share of their incomes to service debt than do people in other countries.
Optimistically, Russia’s GDP will fall only five percent this year, but incomes will fall 10 to 20 percent, leaving 30 to 40 million people in poverty.
The government has delayed releasing projections because it doesn’t want to face up to the problem or have others see just how bad things are.
Russia is devoting only four percent of its budget to fighting the economic crisis, while in other countries that figure is far higher – 10 percent in the US, 14 percent in Spain and 16 percent in France.
To prevent disaster, Moscow must focus on saving the wages of all Russians and adopt a global strategy rather than approach this issue piecemeal.
The Central Bank needs to issue more money and cut interest rates.
The current crisis is much deeper than the one in 2008-2009, but then the Kremlin came up with a strategy. Now it hasn’t despite the fact that it has the resources to do so via its reserve funds and public borrowing.
If it doesn’t take such actions soon, Aganbegyan concludes, it may face “irretrievable losses” and force the economy to begin not from even where it is now but from a much worse place.