MOSCOW (Reuters) – Russia has earmarked nearly $18 billion to fight the spread of the coronavirus and its economic fallout, its prime minister said on Wednesday, pledging additional measures to steer through the crisis that has put the economy on the brink of recession.
Russia is scaling up its crisis response to the coronavirus epidemic while also facing the shock of a crash in the price of oil – one of its key exports – to 18-year lows and the rapid depreciation of the rouble.
“All in all, the finance ministry has reserved 1.4 trillion rubles ($17.8 billion) for the purposes of fighting the coronavirus infection spreading and the anti-crisis actions,” Prime Minister Mikhail Mishustin told a government meeting.
Mishustin told the online meeting chaired by President Vladimir Putin that the government was working on a new set of measures “aimed at overcoming the consequences of the spreading of the new coronavirus infection.”
Russia has approved tax breaks and eased regulatory requirements for companies that are taking a hit from the coronavirus, such as in the food services, tourism, and sport culture sectors as well as cinemas, Mishustin said.
The new measures aim to support employment and small- and medium-sized companies, he said, on the day when Russia expanded its coronavirus lockdown to cover more of its sprawling territory and as the official tally of infections rose to 2,777, a one-day increase of 440.
Twenty-four people have so far died in Russia, authorities say.
Russia, with more than $550 billion in reserves, has room to increase state spending as its lawmakers this week cleared the government to raise state borrowing beyond budgeted limits.
The country is more prepared to face the dual oil price and virus shocks than a few years ago, Fitch ratings agency said on Wednesday.
“Fiscal accounts are less exposed to oil shocks than in 2014-2015 thanks to prudent fiscal management, which has reduced the break-even oil price and the non-oil deficit, conservative planning and exchange-rate flexibility,” it said.
Still, Russia’s economy is expected to slip into recession in the second quarter and return to growth no earlier than next year, a Reuters poll showed.
“We will observe the impact of the coronavirus throughout 2020. Unfortunately, for now we see that all economic indicators look much worse than previously expected,” said Oleg Borunov, deputy chairman at Credit Bank of Moscow.
Additional reporting by Darya Korsunskaya and Vladimir Soldatkin; Writing by Andrey Ostroukh; Editing by Mark Potter