Beyond the pandemic: government support measures for the economy

State support measures for the Russian economy are diverse and depend on many conditions. Critics point out that aid packages are rather small compared to other countries. Most of the aid programmes expired at the end of 2020.

The first state aid measures included deferrals on loans, rent and taxes (excluding VAT), reduced social insurance contributions, as long as loan guarantees and interest-free loans. Later, tax breaks and direct subsidies were added. Many measures were only available to SMEs or certain sectors and were targeted (e.g. related to wages or job retention).

Russia does not have a government-subsidised short-term work scheme similar to the Austrian one, but the Moscow Foreign Trade Centre would be happy to provide information on alternative ways to reduce staff costs if needed.

According to an International Monetary Fund report in April last year, the Russian economy faced a 6 per cent contraction in 2022, but overall it is holding up better than expected. Exports of oil and non-energy products have remained at a higher-than-expected level. In addition, domestic demand is showing resistance due to the effectiveness of measures taken by the central bank to protect the financial sector and the impact on labour, which has been lower than expected. This is a consequence of rising energy prices and declining consumer confidence, as well as a slowdown in manufacturing activity due to persistent supply difficulties and the cost of raw materials.

However, sanctions are still affecting a large part of the Russian banking market.

The sanctioned banks are listed in the SESAM database. Both the exclusion of Russian banks from SWIFT and the Russian bans on foreign currency transfers make payments extremely difficult. A subjective review of all contractual counterparties must be conducted to ensure that they are not subject to sanctions. In fact, it is forbidden to grant assets to sanctioned individuals, companies and organisations, or to grant access to their assets and economic resources, directly or indirectly.

A possible complete halt to Russian gas exports would lead to a further «sharp» decline in growth both this year and next, especially in large industrial sectors.

Russia continues to sell oil and gas at record prices, filling its military budget, which it already had before the war. So a unique situation has developed where it seems that Russia is not particularly affected by the sanctions. However, on the microeconomic level things look quite different. Russia has to change its economic model because it no longer has access to Western financial sources and markets.


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