Regions’ Budgets in January-May 2020: Fiscal Transfers Stabilize the Situation

Alexander N. Deryugin – Senior Researcher of the Russian Presidential Academy of National Economy and Public Administration; Researcher of the Gaidar Institute (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.  

In May 2020, regions’ own tax and non-tax consolidated budget revenues decreased by 19.8% as compared with May 2019; this is a continuation to a large extent of the April trends when regions’ budget revenues were hit hard by the crisis and restrictive measures. At the same time, financial injections on the part of the federal center justified both by an increase in the planned volumes of the financial aid to regions and more rhythmical provision thereof permitted to reduce the risk of reduction of current budget revenues of less well-off regions.

Early this year, the upward trend of differentiation of fiscal capacity observed in 2017–2019 between better-off regions and worse-off regions (tax and non-tax revenues of better-off regions grew faster) changed. Based on the results of January-April 2020, the growth rates of tax and non-tax revenues of worse-off constituent entities turned out to be higher than those of the groups of better-off ones.

Despite the slowdown of budget revenue growth, in January-May 2020 regional budget expenditures increased by 18.7% on the relevant period of 2019 (by 19.6% in May, which factor is a continuation of the April trends and related with the implementation of the package of anti-crisis measures. A shift in the expenditure pattern towards investments was justified by active application of budget funds for these purposes.

Key words: regions’ budgets, regions’ budgets revenues, regions’ budgets expenditures, regions’ public debt, budget loans, bank loans.

Survey of Current Business (April-July 2020)

Sergey P. Aukutsionek – Head of Center for Transition Economy Studies, Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences, Candidate of Economic Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Andrey S. Yegorov – Senior Researcher of the Center for Transition Economy Studies, Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences, Candidate of Economic Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Inessa A. Bachirova – Senior Researcher of the Center for Transition Economy Studies, Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Tatyana V. Serzhantova – Senior Researcher of the Center for Transition Economy Studies, Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

In the “quarantine” April 2020, most of the examined by REB indicators changed for the worse. More than others declined the diffusion indices of output (-22 points), order-book level (-17) and wages (-14). The index of expected in three months changes in output prices fell to 49; previously, it fell below 50 only in the third quarter of 1998. Identical indicator of prices for purchased products also fell to a record low level – it was ower only in 1998 and early 2009.

Key words: Russia, industry, industrial enterprises, price level, wages, employment, output, investment, indebtedness to banks, order-book level, stocks of finished products, capacity utilization rate, financial situation, production restrictive factors.

Socio-Economic Situation During the Pandemic Spring 2020

Aleksandra G. Polyakova – Leading Researcher of the Russian Presidential Academy of National Economy and Public Administration, Doctor of Economic Sciences, Professor (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.  

Anna A. Cheremnykh – Researcher of the Russian Presidential Academy of National Economy and Public Administration (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Victor Yu. Lyashok – Senior Researcher of the Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Elena Е. Grishina – Leading Researcher of the Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

A slowdown in Russia’s social and economic development has become unavoidable under the new coronavirus pandemic restrictions. The decline in economic activity began in March 2020. Than a period of non-working days and the regime of self-isolation had a significant negative impact on final consumption. In May 2020 the Russian economy demonstrated the decline of GDP by 10.9% as compared to May of previous year. GDP for the first five months of 2020 decreased by 3.7%.

In March 2020 retail trade turnover increased by 6% as compared with March 2019. In April and May 2020 there was a decrease by 23 and 19% in annual terms, due to the fall of non-food products sales by 36 and 29%, respectively. Consumption of paid services decreased by 40%. Together with the government measures, the contraction of demand did not change the consumer prices dynamics – since the beginning of the year prices have increased by 2.4%.

In the first three months of 2020 the unemployment rate was decreasing, the number of employed remained at the level of the previous year. In April-May, the number of unemployed increased by almost a third, and unemployment rate reached 6.1% by the end of May. The number of people registered as unemployed at the employment services rose from 0.7 million by the end of March to 2.1 million people by the end of May.

According to the INSAP RANEPA telephone survey, 28% of working respondents in April 2020 received a lower salary than in March, for 10% of them the salary decreased twice or more. By May, 9% of employees’ working time was reduced, 5% of employees were sent on paid leave, 4% – on unpaid leave. In May one third of the population assessed their financial situation as “bad” or “acceptable, but with negative dynamics”. At the same time, financial situation of a quarter of the population was stable and positive.

According to Rosstat, a year ago there were 26.5% population with “bad” and “very bad” material well-being assessement; in 2Q 2020 the number increased to 31%.

In the second quarter of 2020, real disposable money incomes of the population decreased by 8.0% compared to the second quarter of previous year. A more significant annual drop in real incomes of the population was registered only in 1999.

The article was written on the basis of the RANEPA state assignment research programme.

Key words: labor market, wages, monetary incomes of the population, consumption of goods and services, social well-being, social support programs, coronavirus.

Assessment of Extended Multiplicative Socio-Economic Effects on the Basis of Input-Output Balance Model

Yury Yu. Ponomarev – Head of Laboratory for Infrastructure and Spatial Research of the Russian Presidential Academy of National Economy and Public Administration, Senior Researcher of the Gaidar Institute, Candidate of Economic Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Dmitry Yu. Evdokimov – Junior Researcher of the Russian Presidential Academy of National Economy and Public Administration (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

The article provides extended approach to the assessment of multiplicative socio-economic effects (including indirect and induced) on the basis of input-output balance model and its adaptation to application in RF subjects. Assessments of sectoral multiplicative effects (multipliers) for the Russian economy were calculated on the basis of suggested approach for a basket of key economic indexes (gross output, gross value added, total employment) based on the latest table “input-output” (2017). On the basis of obtained assessment we analyzed multiplicative effects from productive and dead budget outlays.

Key words: multipliers, input-output balance, “input-output” tables, industries.

Features of Remote Employment in March-June 2020 in Russia

Victor Yu. Lyashok – Senior Researcher of the Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

We described features of remote employment in Russia in March-June 2020 in Russia on the findings obtained from the monitoring of the population. The research was conducted on the basis of online survey among Facebook users in mid-June this year. Responses from 2,151 persons at 18 and over residing in Russia got into sample.

The article was written on the basis of the RANEPA state assignment research programme.

Key words: remote employment, online survey, labor market.

Analysis of the Russian Money Market in the Wake of the Epidemiological Crisis

Alexandra V. Bozhechkova – Head of Monetary Policy Department of the Gaidar Institute; Senior Researcher of the Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Pavel V. Trunin – Head of Center for Macroeconomics and Finance of the Gaidar Institute; Director of Center for Central Banks Studies of the Russian Presidential Academy of National Economy and Public Administration, Doctor of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

In March – the first decade of May 2020, amidst the acute phase of the epidemiological crisis the banking sector’s need in liquid funds increased considerably. It was justified by growth in the money supply volume, credit institutions’ correspondent account balances, as well as commercial banks’ mandatory reserves. However, as the economic situation commenced to stabilize from the second decade of May and the uncertainties were clearing up, the liquidity surplus began to grow again. To stabilize further the market, the Central Bank of Russia supplemented the list of instruments of ruble liquidity provision to credit institutions with one-month and one-year REPO auctions, however, amid the recovery of the level of liquidity they are not much in demand yet.

Key words: inflation, monetary policy, key rate, capital outflow, Bank of Russia.

State's Ownership Policy in 2017-2022: Some Results and New Outlines

Georgy N. Malginov – Head of Ownership and Corporate Governance Department of the Gaidar Institute; Leading Researcher of the Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences (Moscow, Russia). Е-mail: malginov@ieр.ru

Alexander D. Radygin – Chairman of Academic Board, Head of Center for Institutional Development, Ownership and Corporate Governance of the Gaidar Institute; Director of Institute for Applied Economic Studies, Russian Presidential Academy of National Economy and Public Administration, Doctor of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

The article analyzes main trends of the privatization process and related aspects of the state's ownership policy in 2019 – early 2020.

Key words: ownership relations, projected plan of privatization, Plan of privatization, state property, Rosimushchestvo.

Scenario Forecast of the Main Parameters of Macroeconomic Development and the Budget Sphere of Russia for 2020-2022

Sergey G. Belev – Head of Budget Policy Department of the Gaidar Institute; Senior Researcher of the Budget Policy Department, Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Alexey L. Vedev – Head of Center of Structural Research of the Russian Presidential Academy of National Economy and Public Administration; Leading Researcher of the Gaidar Institute, Doctor of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Sergey M. Drobyshevsky – Scientific Director of the Gaidar Institute; Deputy Scientific Director of the IAES, Russian Presidential Academy of National Economy and Public Administration, Doctor of Economic Sciences, Associate Professor (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Andrey S. Kaukin – Head of Department for System Analysis of Sectoral Markets of the Russian Presidential Academy of National Economy and Public Administration; Head of Center for Real Sector of the Gaidar Institute, Candidate of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Alexander Yu. Knobel – Head of Foreign Trade Department of the Gaidar Institute; Director of Center for Foreign Trade Department of the Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Eugenia M. Miller – Senior Researcher of the Russian Presidential Academy of National Economy and Public Administration (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Pavel V. Trunin – Head of Center for Macroeconomics and Finance of the Gaidar Institute; Director of Center for Сentral Banks Studies of the Russian Presidential Academy of National Economy and Public Administration, Doctor of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Development of Russian and world economies in Q2 2020 demonstrates that despite economic collapse countries are adapting to the current situation and in case there is no second wave of pandemic the crisis will take a V-type form. In particular, the oil price is unlikely to drop below $35 per barrel and the recovery of the world economy up to the pre-crises level is expected by the end of 2022. Forecast for the Russian economy has been improving too, decrease of GDP will not exceed 6.5–7.0% in 2020, this being said, common for the Russian economy risks, major weakening of the ruble and inflation outburst are out of picture. The enlarged government budget deficit can hit 7% of GDP in 2020, however, taking into account balance brought forward on the budget accounts which can be financed, in our view, by borrowings on the ruble market of public debt without the risk to Russia’s debt sustainability.

In 2021, the high budget deficit will remain (no less than 5,0% of GDP), however, the debt capacity of the Russian market allows to attract the required funds to the budget. In 2021–2022, we expect the recovery of the investment activity, real income of the population, and consumer demand. Nevertheless, by the end of 2022, Russian economy will not reach the 2019 level regarding GDP, and in order to speed it up it is necessary to create conditions for further stepping up investments above the 2014–2019 levels as well as for easing budget policy within available options.

Key words: scenario forecast, world economy, macroeconomics, budgetary sphere.

Improvement of Business Climate for SME as a Response to the Current Crisis and Coronavirus Pandemic

Vera A. Barinova – Head of Centre for Entrepreneurship Studies of the Russian Presidential Academy of National Economy and Public Administration; Head of Centre for Innovation Economics of the Gaidar Institute (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Stepan P. Zemtsov – Leading Researcher of the Russian Presidential Academy of National Economy and Public Administration; Senior Researcher of the Gaidar Institute, Candidate of Geographic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Yulia V. Tsareva – Researcher of the Russian Presidential Academy of National Economy and Public Administration (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Entrepreneurial sector of the Russian economy was hard hit by the current crisis due to a plunge in demand and anti-epidemiological restrictions. This paves the way for the closure of a great number of enterprises, further growth of the unemployment rate and reduction in average income of the population. Growth in the share of coerced entrepreneurs and self-employed is one of the mechanisms for the labor market adaptation to crises in Russia. Many contemporary companies were established during previous crises that is why massive improvement of conditions for launching and running business can be one of the feasible strategies for fighting poverty and setting preconditions for the post crisis economic recovery.

The article analyzes key features of the investment climate in Russia compared to foreign countries including in separate regions according to ASI data. Despite a significant upgrade of Russia in Going Business rating, the regions retain significant differences even in formal procedures of doing business. Authors proposed instruments for the improvement of business climate across various strands: digitalization of state services, in particular customs regulation, setting up of a unified online system of support, interactive portal of control and supervisory requests, increased financing of effective institutes of development, introduction of tools for assessment of effective support. This can become a base for an open and predictable post-crisis entrepreneurial policy in Russia.

The article was written on the basis of the RANEPA state assignment research programme.

Key words: post crisis policy, conditions of doing business, transformation of business climate, small and medium-sized enterprises (SME), investment climate, corona crisis, regions of Russia.