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29 May, 2020 06:16

Most Russian companies face huge losses due to virus lockdown & have difficulty getting government aid

Most Russian companies face huge losses due to virus lockdown & have difficulty getting government aid

More than four million Russian businesses saw their revenues falling by a third due to the coronavirus outbreak and measures to contain it, according to a report submitted to President Vladimir Putin. 

This is nearly 67 percent of the total of over six million small and medium-sized enterprises, large companies and individual entrepreneurs working in the country, Russia’s business ombudsman, Boris Titov, said in his report on Thursday.

According to the survey cited in the document, more than half of firms called the situation they’re facing a “crisis” and “catastrophe,” while six in ten said their chances of survival are below fifty percent. 

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As many firms had to halt or at least downsize operations to comply with the measures to contain the outbreak, the Russian government laid out plans to offset the economic fallout from the pandemic, including financial support to businesses. However, not every crisis-hit company qualified for receiving the state aid, and around a third of those who did, finally could use the funds, according to Titov’s data.

“In other words, only about ten percent of companies in Russia have used [government] support,” the report said.

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The ombudsman found out that firms mostly benefited from tax breaks, direct subsidies to pay salaries to their employees as well as a reduction in employee insurance payments, but some other measures laid out by the government proved to be less effective. For example, banks take too long to consider applications for cheap credit and around 30 percent of them are denied.

Russia is set to spend around 3.2 trillion rubles (around $45.2 billion) to support the economy during the Covid-19 crisis, according to the Ministry of Economic Development. Among other measures, the anti-crisis package includes over $11.8 billion support for small and medium-sized businesses, while around $8.4 billion is reserved to help industries most affected by the outbreak.

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