Page 26 - bne Magazine Apri20

26 I Cover story bne April 2020
EASTERN EUROPE
Russia
VIRUS UPDATE
• Number of cases as of March 25: 659
• Comment: so far the infections seem to be limited to
Moscow although there are fears it is growing unrecorded in the regions. Testing has been sporadic and there is
a question over the quality of the test kits that Russians are using that has led to lower positive results and experts expect the virus to spread rapidly. A referendum on changing the constitutional to expand Putin’s powers
was postponed from April 22 to at least June.
PUBLIC HEALTH MEASURES
• Early reports suggest that Russia might opt for en-masse testing and active tracking of confirmed coronavirus cases as its strategy to contain the epidemic. A number of private companies and state-private alliances are racing to start producing affordable and fast tests, while two largest internet companies Yandex and Mail.ru pledged support in organising the testing. The Prime Minister Mikhail Mishustin ordered the Ministry of Communication to rollout a mobile tracking system for confirmed coronavirus cases by March 27.
• Lockdown: schools were closed in mid March and Moscow went on full lockdown overnight on March 30. The measures imposed were sudden and draconian, with residents forced home and allowed to go no more than 100m from their homes to shop or walk pets. Other regional cities are expected to follow.
• State is building a new special hospital that will be ready in a month.
• State has ordered equipment and RDIF have developed a new portable state-of-the-art testing kit that will be available in April.
• Moscow was put on total shut down on March 30 with only 12 hours notice. Residents are not allowed to travel further than 100m from their homes and then only on essential errands to the local shop, pharmacy, walk the dog or take out the rubbish.
• The initial week off work on full pay that went into effect on March 30 was also rapidly extended to an entire month indoors effective from April 2.
• The City of Moscow will issue special QR codes to all Muscovites in the first week of April, who must apply online for permission to leave their apartments.
• Putin went on TV for a second time at the very end of March to call on the regional governors to lock down their cities as well. St Petersburg, Russia’s second largest city,
had followed Moscow’s lead and locked down immediately
but the rest of the country was expected to follow suit. • The Duma passed a range of legislation that includes
fines for those that break quarantine that includes a
7 year jail sentence for manslaughter for anyone that breaks quarantine and can be shown to have caused the deaths of two people as a result.
ECONOMIC MEASURES
• Initially the Kremlin set up a RUB300bn ($4bn) fund to help companies but that was rapidly expanded to RUB1.4 trillion ($18bn) as the scale of the disaster became apparent.
• Tax payments delayed 3 months for a number of industries, moratorium on bankruptcies
• Increased funds for unemployed
• Budget rule suspended for one month to give CBR access
to more dollars to support currency
• SOE dividend payments delayed 3 months
• Minimum wage payments guaranteed for anyone that
loses their job.
ECONOMIC FORECASTS (where available)
• GDP growth forecast cut from 1.7% to the range of -1% to -2.7% in 2020.
• RUBUSD rate to fall to RUB75/$.
• Current account to remain in surplus but halved from
$70bn earned in 2019.
• Budget to go from surplus in 2019 to 0.8% deficit in 2020
or more which can easily be covered by reserve funds. • Net debt: no change, no international Eurobond issues
expected, domestic debt issues currently suspended due
to volatile.
• While the initial economic forecasts predict a rebound in
the third or fourth quarter of this year, former Finance Minister and Audit Chamber head Alexei Kudrin told Putin to prepare for a much more sever crisis with an economic contraction of 3-5% if the virus burns out in three months and 8% if the problems persist through to the autumn.
• Kudrin also recommended that state spending be massively increased to 5% of GDP, equivalent to spending half of the money in the National Welfare Fund. Previously Finance Minister Anton Siluanov claimed here was enough money in the NWF to last a decade, but Kudrin’s version of events means that money would run out after two years.
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