Russia desperate to bolster virus-hit finances

The coronavirus is taking a toll on even countries hitherto considered economically sound.

After easing its fiscal rules and raising taxes, Russia is running out of options to give a fillip to public finances strained by the pandemic and the collapse in the price of oil, its main export.

Bars, clubs and restaurants in Moscow now face two months of closures to reduce the spread of COVID-19, Mayor Sergei Sobyanin said, as Russia’s daily tally of cases exceeded 20,000.

Authorities have been adamant that severe lockdown restrictions, like those seen in the spring, will not be introduced, even as the official death toll from the virus has surged past 31,000.

Russia is already testing two vaccines against the virus and is on the cusp of registering a third, President Vladimir Putin said, adding that all of the country’s vaccines were effective.

Russia is rolling out its Sputnik V vaccine for domestic use despite the fact that late-stage trials have not yet finished, and said it was more than 90 per cent effective, following earlier comments by vaccine developers Pfizer Inc and BioNTech, who said the same of their experimental COVID-19 vaccine.

That could prove a headache for President Vladimir Putin as he seeks to fund a recovery and boost welfare spending for ordinary Russians before next year’s parliamentary elections.

The coronavirus situation in Russia is continuing to deteriorate, Deputy Prime Minister Tatiana Golikova said at a recent meeting.

Golikova said there was a critical situation in 16 Russian regions, where hospital beds were at more than 90 per cent of capacity.

Russia said it would send army medics to a region in the Urals hit by a surge in COVID-19 cases, after doctors there made a public plea to Putin for help.

Russia took a hit from lower oil prices and the global coronavirus pandemic, which led to lockdowns that sparked a full-scale economic crisis, prompting the central bank to slash rates.

The country has the fourth-highest virus caseload in the world with more than 1.83 million registered infections, and over 31,500 deaths.

Russia has reported a much lower virus fatality rate compared to other badly hit countries and Kremlin critics have accused the government of attempting to downplay the severity of the pandemic.

Russian markets have also come under pressure in the wake of the political crisis in neighbouring Belarus and over the suspected poisoning of Kremlin critic Alexei Navalny.

Putin is seeking an end to “illegitimate sanctions” against countries like his. This could stimulate the coronavirus-hit global economy and create jobs.

In a somewhat muted speech for the often tough-talking Russian leader, Putin told the UN’s 75th anniversary gathering that countries need to join hands and work together better to fight the virus and other global problems.

Putin has been pushing for years to end US and European Union sanctions imposed on Moscow after it annexed Crimea from Ukraine in 2014, was accused of interfering in the 2016 US elections, and other actions. Moscow views the Crimea annexation as legitimate, and denies meddling in the vote that gave Donald Trump the US presidency.

The decline in global demand caused by the pandemic has dragged oil prices down to around $40 barrel, roughly half what Russia would, in theory, need to balance its budget this year. The overall economy is expected to shrink by as much as 5 per cent this year.

Russia needs to pull itself up by its bootstraps if it has to put the virus under control. With the harsh winter approaching, tough measures will be needed to curb the increase in coronavirus infections, if the economy has to be saved.