Russian Economy Faces Difficulties but Not Crisis

The Russian economy is in difficulty, not crisis, stated Russian Prime Minister Vladimir Putin today in a conversation at a public reception in Novosibirsk sponsored by the United Russia Party, of which Putin is head.

Photo: Russian Economy Faces Difficulties but Not Crisis

“There are difficulties in world finances,” Putin said, “and there really is a crisis there. Here, thank God, there is difficulty, not crisis.” He expressed hope that a crisis did not develop and emphasized that the Russian government was taking definite measures to counteract its negative effects on the economy. Much is succeeding but much remains to be done, Putin said.

Putin also commented on government support for small business at that meeting. He promised that the Russian government would dramatically increase that support, mentioning that 3.4 billion rubles was spent for that purpose from the 2008 federal budget. Funds would be distributed through Sberbank, he said, adding that the issue is being actively discussed in the government, Kommersant reports.

An editorial in the newspaper Vedomosti, a business journal, on Monday noted a "central bifurcation" between what top government officials are saying to the business community about "an unavoidable decrease in the rate of economic growth" and the reassuring words of Putin and President Dmitry Medvedev, meant for the masses on TV.

"Financial ignorance of Russia's residents is playing into the hands of the government: People have little knowledge of the crisis, its possible impacts, their rights and risks," the editorial said.

Even among Russian economists and political figures, there's disagreement about what the government is up to as it implements a planned bailout package of some $200 billion.

Russian officials have said repeatedly that they're looking to stabilize the stock market, protect the ruble and rescue banks in financial distress.

However, Alexander Murychev, the vice president of the influential Russian Union of Industrialists and Entrepreneurs, argues that the government has paid more attention to larger banks while letting many smaller ones languish. Four of the banks that were sold recently to government-affiliated banks or companies were among the 50 largest in the country, though the central bank handed out more than $14.5 billion in loans to more than 80 banks Monday, presumably including small ones.

Source: agencies