Over 86% of companies in Russia affected by sanctions - monitoring data

MOSCOW. May 31 (Interfax) - Over 86% of companies in Russia have been affected by sanctions, according to the results of business status monitoring presented by the office of Russian presidential business ombudsman Boris Titov.

"As many as 86.8% of the polled entrepreneurs have been affected by sanctions, including 77.4% who say they have adapted to the sanctions or are hoping to do so, and 11.7% who have failed and have had to stop their operations either fully or partially, the office said.

It polled heads and owners of 6,003 companies from 85 regions of Russia.

According to the monitoring data, the overwhelming majority of the respondents, or 67.1%, have experienced fallout from the economic recession. Out of that number, 29.4% report a decline in revenue but say the situation is under control. Another 24.9% of entrepreneurs describe their status as palpable contraction, and 7.1% say they are in crisis. Meanwhile, 5.7% of the respondents said they had either shut down their business or were planning to do so in the near future. Only 10.4% of the respondents claim their business is stable and growing.

"The most significant problem is a decline in demand reported by 62.2% of the respondents, followed by a shortage of working capital and cash gaps, disruption of supply chains, and difficulties in import delivery," the office said.

Over half of the respondents said that the government was not doing enough to deal with sanctions, while approximately 35% describe government efforts as "calm and effective."

More than half of the entrepreneurs believe that under the current circumstances "it would be necessary to drastically change the rules of the game rather than make cosmetic changes - there is a need for a new economic model for convenient, profitable and safe operations," the office said.

Businesses are expecting the government to help them by cutting taxes and writing off some of their debts. They also count on cutting the rate of insurance contributions to 15% for the entire payroll base, cheaper and more accessible revolving credits, and a freeze on natural monopoly charges.

"The crisis is here and it is evolving. The monitoring clearly indicates that most businesses view the current government response to the change as insufficient. The only way to deal with these problems is through drastic reforms and an alteration of the development model itself," Titov said.