13 Apr 2022 12:14

Russian economy has begun to decline, volume of trade and industrial output down 11% - Belousov

MOSCOW. April 13 (Interfax) - A "downturn" in the Russian economy is one of the main risks currently, and it has already begun amid the logistical restrictions and lack of liquidity, though it has practically not affected the labor market thus far, First Deputy Prime Minister Andrei Belousov said during a speech at the Federation Council.

"One of the main risks today is a 'downturn' in the economy owing to logistical restrictions, on the one hand, and the lack of liquidity in the economy, on the other hand. Data from the surveys of the directors of systemically important enterprises show that the downturn has unfortunately already begun, though it has practically not affected the labor market thus far," Belousov said during the speech.

"Consequently, production in industry and trade has declined about 11%, and output in other sectors has decreased 9%-10%," Belousov said.

Injection of funds into the economy "through state budget channels" has been accelerated in order to support it, he said. Federal budget expenditures rose 20% year-on-year in the first quarter.

Belousov cited preferential lending to enterprises at a rate of 11% as an example of funds being injected into the economy. "The loan portfolio will be 1.3 trillion rubles. And the data as of this morning, banks have already approved loans of 827 billion rubles and concluded agreements for almost 200 billion rubles today," he said.

A similar program has been launched for backbone agricultural organizations at a rate of 10%. Within its framework, the loan portfolio will be up to 300 billion rubles, and banks have already approved loans of 150 billion rubles, Belousov said.

"For carrying out spring field work, a decision has been made to provide preferential lending to agricultural enterprises in the amount of 158 billion rubles. There are plans to increase this volume by another 60 billion rubles," Belousov said, adding that another almost 134 billion rubles will be directed toward ensuring the loan obligations undertaken by agriculture earlier.

Companies in the IT sector will be provided preferential lending at a rate of no higher than 3% for the implementation of new projects and the development of new products, as well as loans at a rate of 11% to cover current activities, he said.

According to Belousov, the Russian government estimated the total amount of support for the economy that was safe for inflation to be 7-8 trillion rubles, and the limits have nearly been reached.

"In terms of systemically important enterprises and support for medium-sized companies, there are quite a few requests about this. We have certain macroeconomic limits in which we work. We have now roughly found the limits in which we can operate without exacerbating the burden on inflation. When talking overall about loans, about lending to the economy through all channels, then the figure is somewhere around 7-8 trillion rubles. This is the position of the government, of the Economic Ministry Development," he said.

"Consequently, we have nearly reached the limits, when accounting for mortgages, lending to strategic enterprises, and lending to SMEs," Belousov said.

"This means that in order to support other groups of enterprises, some other measures need to be taken, including reducing the tax burden and so on," Belousov noted.