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already say that we are waiting for
a decrease in GDP by 5-6%, although the forecast for this year was the opposite: an increase of almost 3%. This forecast is closer to pessimistic. But this is a very significant reduction in the economy," Yefimov said.
Yefimov singled out the oil and gas industry, as well as the financial sector, both of which play an important role in the city’s economy. Although Moscow does not have any oilfields, nearly all
the major energy companies have their headquarters in Moscow and a quirk of Russian law is that companies pay their regional taxes – mostly income tax and profit tax – where their HQ is registered, not where they work. As a result Moscow collects about 85% of all corporate taxes paid in Russia. VAT, on the other hand, goes to the federal budget and makes up about a third of the Ministry of Finance's revenues. That means the halt in retail affects the local Moscow economy indirectly by destroying jobs, but not directly, as the city's take is unaffected by the halt in VAT payments on that c.$200bn retail turnover in the city.
"Despite the fact that [the energy] industry now accounts for only 5–6% of
the local economy, instead of 16–17% earlier, budget losses will be noticeable. We also see that the banking sector will sag significantly, which directly reflects the state of the economy. We expect a decline in manufacturing and retail," Yefimov said.
Yefimov says the hit to the local tax
take will be between 15% and 20%, or some RUB600bn ($8.5bn), two-thirds of
budget execution for four months, then compared with last year, the decrease was 7.6%, and we laid down the growth of 8%. That is, we have already received almost 16%, this is RUB140bn – a significant figure, even with our budget."
The fall in the local budget revenue will be exacerbated, as Mayor Sobyanin has also provided a whole range of support
“Moscow, as a metropolis, has always suffered less from economic instability due to the diversified structure of the economy and large consumer demand”
which is down to lost corporate income tax and another fifth from personal income tax of workers.
"According to personal income tax, revenues are still 7% higher than
last year, but this is due to the rather successful outcome of most companies last year and bonuses paid by large organisations in the first quarter," says Yefimov. "If we take the current
measures to Moscow organisations in the form of exemptions from payment of rent or deferral of rental payments (non- tax revenues), as well as in the form of deferment of payment of property tax, land tax, trade tax for the first quarter. "For example, income from property tax of organisations decreased by 16%, from land tax – by 11%, from trade taxes – by 23% compared with the four months of 2019," says Yefimov.
Russian government adopts a third economic
stimulus package, calls for rescue plans by June 1
bne IntelliNews
Russia's President Vladimir Putin has ordered the government
to draft a National Recovery Plan by June 1, jointly with regional authorities and business unions, drawing a roadmap of repairing the coronavirus (COVID-19) pandemic damage, Putin said in a televised address on May 11.
The plan will have to be focused on the recovery of economic activity, as well as recovery of employment and incomes of the population, the Kremlin website announced.
The non-working days that lasted throughout April and extended until the end of May holidays will not be prolonged beyond May 12, Putin said, leaving regional authorities to determine the exact plan on further lockdowns.
As reported by bne IntelliNews, so far the government has rolled out two economic support packages, worth RUB3.1 trillion ($42.1bn) or 2.8% of GDP, and is preparing a third package. Minister of Finance Anton Siluanov has argued that as the government is not cutting budget spending this year despite the slump
in oil prices, the actual amount of state support is at 6.5% of GDP.
Most recently Siluanov has outlined
a base-case scenario of a 5% GDP contraction in 2020 and the government could borrow 1.5-2% of GDP (RUB4- 4.5 trillion, or $53bn-60bn) in 2020
to finance the 4% budget deficit.
The government has already moved to sure up the health of the country's most important companies and released
a list of 1,151 “strategically important” companies that are entitled to state
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