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Healthcare

UPDATE 1-Russia's measures to fight coronavirus crisis to be worth 2.8% of GDP

(Adds detail)

MOSCOW, April 16 (Reuters) - Russia’s planned measures to fight the new coronavirus pandemic will be worth around 2.8% of its gross domestic product, Finance Minister Anton Siluanov said on Thursday, warning of budget shortfalls amid low oil prices.

The percentage equates to around 3 trillion roubles ($40 billion), based on the size of the Russian economy in 2019 and the current rouble exchange rate.

The new coronavirus has prompted a partial lockdown across Russia that is throttling business activity already dented by the rouble’s recent fall to four-year lows and a crash in the price of oil, one of Russia’s main exports.

The figure of 2.8% of GDP includes direct budget spending, tax cuts and tax breaks and direct state support for firms and households, Siluanov said.

Russia confirmed 3,448 new cases on Thursday, a record daily rise that brought its nationwide tally to 27,938. President Vladimir Putin postponed a lavish annual showpiece event - celebrations on May 9 including a huge military parade across Red Square to mark 75 years since the Soviet victory in World War Two.

The finance ministry said it would spend around 2 trillion roubles from the National Wealth Fund this year to cover budget shortfalls due to low oil prices if prices for Russian Urals blend crude stay near current levels of $20 per barrel URL-E.

“The global spread of the coronavirus has a negative impact on economic activity in nearly all sectors of the economy, not only in oil and gas,” Siluanov said.

Russia, which had $565 billion in gold and foreign exchange reserves as of April 10, will support small and medium-sized enterprises with zero-interest loans and will provide state guarantees to avoid a rise in unemployment, Siluanov said.

Meanwhile, a budget shortfall amid the coronavirus crisis this year may exceed 1 trillion roubles, which the finance ministry will be able to offset using other sources, Siluanov said without elaborating.

The overall state support and budget shortfalls may eventually top 6.5% of GDP in 2020, Siluanov said.

Russia, in need of extra funds, has already scrapped 2020 borrowing limits of 2.3 trillion roubles in OFZs and up to $3 billion in Eurobonds.

On Wednesday, there was strong demand for auctions of OFZs as central bank data showed that major Russian banks and foreign investors could help Moscow raise funds to finance its response to the coronavirus outbreak. ($1 = 74.4070 roubles) (Additional reporting by Gabrielle Tétrault-Farber and Katya Golubkova; Writing by Andrey Ostroukh; Editing by Kevin Liffey)

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