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3 Feb, 2021 12:22

Back to the USSR? Five-year plans are the way to recover Russia’s GDP after Covid-19, economists say

Back to the USSR? Five-year plans are the way to recover Russia’s GDP after Covid-19, economists say

Three academics from the Russian Academy of Sciences have proposed returning the country to the Soviet-style five-year economic plan system as a means of combating the Covid-19 related downturn.

In a report analyzed by Moscow business daily Vedomosti, Abel Aganbegyan, Boris Porfiriev and Alexander Shirov proposed several reforms to stimulate GDP growth of up to 3-4 percent a year.

According to the newspaper, the suggestions include returning to five-year planning for socio-economic development and raising funds by using banks' assets and the savings of businesses and citizens – not just the Russian National Wealth Fund. The academics also propose extra government borrowing and mass privatization.

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By raising more money, the economists suggest that the minimum wage, unemployment benefits and pensions can all be increased. They also proposed removing all income tax from low earners and introducing a progressive system, similar to that seen in much of Europe, including France, Germany and the United Kingdom.

During the Soviet Union, a state committee came up with economic plans every five years, each time focusing on the day's current issues. The last five-year plan was implemented in 1991 and wasn’t completed due to the fall of the USSR.

Estimates recently released by government statistics service Rosstat revealed that Russia's GDP decreased by an estimated 3.1 percent in 2020, owing to both Covid-19 related shutdowns and a fall in global energy prices.

In January, Prime Minister Mikhail Mishustin revealed that the country's authorities expect the economy to grow in 2021.

“After contraction in the second quarter, it is recovering gradually, and we plan to be positive and reach sustainable growth by the end of this year,” he said.

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