Russia revives pandemic business support program

Russia is resuming a support program for companies in hopes of protecting them from the effects of international sanctions following the outbreak of the war in Ukraine. The program revives measures taken in 2020, after the coronavirus pandemic.

Russia’s invasion of Ukraine into Ukraine on February 24 unleashed an unprecedented wave of economic and financial sanctions from the West and its allied governments. Companies are also closing or suspending business in Russia.

In a statement, the Russian government said it was proposing a “comprehensive package”, first presented as a set of anti-crisis measures in 2020, to “support the economy and business in the face of external sanctions”.

Measures will include state guarantees that allow companies to restructure loans or make new ones, as well as access subsidies to help cover costs.

The most relevant companies will also be exempt from financial stress tests, according to the government.

Among the sectors that benefited from support during the most severe period of the Covid-19 crisis are banking and aviation.

President Vladimir Putin on Saturday said Western sanctions against Russia were akin to a declaration of war and defended the invasion of Ukraine, saying Moscow needed to protect its own interests and those of Russian-speakers in the warring country.

The sanctions have shaken the prospects of a commodity-dependent economy, which was already suffering from 9% inflation before the invasion.

The Moscow Stock Exchange has been closed since February 25, after falling sharply. But the ruble, a local currency that would normally be supported by oil – Russia’s main export – has lost more than 40% of its value this year, despite the Russian central bank doubling its key interest rate last week.

This Monday (7), a holiday in Russia, the ruble was quoted at 131 per dollar.