Russia economic stimulus package was announced by Prime Minister Vladimir Putin in November 2008. Prime Minister Putin has assured his countrymen that their Russian economy stimulus package would be successful in guiding them through global economic crisis to a better economic future.
An economic surplus package in Russia worth $20 billion has been earmarked for cushioning Russian economy from unfavorable impacts of global recession.
A number of fiscal measures have been undertaken in this economic stimulus package of Russia for increasing disposable income for consumers and business houses. As per economic stimulus package to Russia profit tax has been decreased from 24 percent to 20 percent, which allows funds for investments. Russia’s foreign exchange, earned from oil, and gold reserves are large enough for tiding over this global economic crisis. According to finance minister Alexei Kudrin, deficit in national budget would be one percent of gross domestic product. However, one feels that an economic surplus package in Russia would still come in handy.
According to records of November 2008, Russian economy, which had grown at an annual rate of 7.5 percent, is projected to fall to 6.5 percent and subsequently to 3.5 percent. Production cutbacks, job losses and pay cuts have been announced across various segments of Russia’s economy. Instances of 50 percent reduction in production are not unusual. Employee payments have been reduced from anywhere between 1.5 percent and 10 percent. Lack of liquidity and reduction in bank lending rates have forced consumption expenditure to diminish.
Oil and metals are primary export revenue earners for Russia. These minerals being accountable for nearly 80 percent of export earnings. A shift in overseas demand for these commodities can influence foreign revenues to a considerable extent. A decrease in international oil prices has drastically affected foreign exchange earnings of this nation. A reduction in export earnings coupled with a rise in social security costs has diminished foreign exchanger reserves of Russia from $590 billion to $460 billion. To control money market behavior Russian Central Bank has widened their ‘rubles’ trading. This is an important part of an effort to strengthen Russia’s economic stimulus package.