90% of Russian businesses have not received government support

RUSSIA / FSU POLITICS - In Brief 30 May 2020 by Alex Teddy

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On May 28 the business ombudsman complained that only 10% of businesses have received emergency financial support so far. Over 50% of businesses are in crisis. About 60% say their chances of survival are even.Boris Titov - the business ombudsman - submitted a report to the president presenting this bleak outlook.Government low interest loans to pay salaries are available only in sectors of the economy that are vital or are most seriously impacted by coronavirus. Tax holidays have also been issued.The government plans to support 35% of companies. Titov concluded that 67% of companies have been severely affected by the crisis. Of the 35% of businesses that are eligible for government support only a third have thus far received the support. The government is helping businesses with a 6 month tax deferral. Employee insurance payments by employers have been reduced by the government. Titov asked the president to broaden the definition of a company that is severely affected by the crisis. Titov suggests that any company that has lost over 30% of its income should be eligible for the scheme. He also wants the state to guarantee more low interest bank loans so that banks lend more. Titov has suggested income tax holidays for employees in badly hit companies. The government is loathe to overburden itself with financial commitments. It does not want to make promises that it cannot fulfill. Moreover, it is worried that some companies will seek support that do not need it.