Putin Pushes Back $400 Billion Development Plan, Blames Pandemic

Russian President Vladimir Putin agreed to push back completion of an ambitious $400 billion investment and development program, blaming the economic havoc wreaked by the coronavirus epidemic.

“I ask the government with the participation of the State Council to adjust the national projects within three months,” Putin said at a televised meeting Monday with ministers and officials. “We must proceed from their realities.”

The projects that were meant to be completed by 2024 require adjustment because “we will have to work in conditions of stricter budget restrictions” due to the coronavirus, Prime Minister Mikhail Mishustin told Putin. “It is possible to extend the time frame for achieving the national goals that you mentioned today to 2030.”

Putin made the national projects the centerpiece of his election program for his fourth term when he won a landslide in 2018. He overhauled the government at the start of this year, installing Mishustin in place of long-serving ally Dmitry Medvedev, partly out of disappointment at the pace of progress in implementing the spending program designed to boost Russia’s sluggish growth and raise living standards.

The Covid-19 crisis and the slump in oil prices within weeks after the new government’s appointment, however, has blown his plans off course as Russia battles to overcome the worst recession in a decade following a national lockdown to curb the spread of the virus.

Russia’s budget has swung from a surplus in 2019 to a deep deficit this year, while the government envisages spending 8.7 trillion rubles ($123 billion) on an economic recovery plan over the next two years.

While it’s unclear for now how much of the program may be delayed beyond the original deadline, Putin risks seeking re-election in 2024 without having fulfilled his promises to voters, after the July 1 referendum endorsing constitutional changes that may allow him to rule for two more terms until 2036.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.