Putin offers week-long holiday for Russians in social package to combat coronavirus

MOSCOW (Reuters) - Russian President Vladimir Putin on Wednesday proposed various unconventional emergency social measures to support families and businesses amid the global coronavirus outbreak, such as a week-long holiday for workers and higher taxes on dividends.

Russian President Vladimir Putin addresses the nation on the coronavirus disease (COVID-19) outbreak in a televised speech in Moscow, Russia March 25, 2020. Sputnik/Alexei Druzhinin/Kremlin via REUTERS

During a televised address to the nation, Putin sought to reassure Russian citizens and markets that the government would use all of its available force to stave off economic collapse.

Russia has reported 658 cases of coronavirus, with Wednesday seeing its sharpest increase in new cases, and says nobody has died. But the economy has been hit by prolonged uncertainty over coronavirus and tumbling oil prices, which has seen the rouble fall to four-year lows.

Putin’s announcement that next week, beginning on March 30, would be an extended holiday for workers, with the exception of key business like pharmacies, banks and supermarkets, was an unconventional step. Some other countries have preferred locking down cities, with people only allowed out for food and medicine.

“Russia’s economy, like that of other countries, is under strong negative pressure because of the consequences of the epidemic,” Putin said.

“It is now crucial to prevent the threat of the disease spreading rapidly. Therefore I declare next week a non-working week with pay.”

Alongside this measure, Putin said unemployment benefits should be lifted to mirror the minimum wage, at 12,130 rubles ($153) a month, specifically mentioning the need to support young people, a group of voters he has traditionally found harder to win over at elections.

He suggested increasing child benefits by an extra 5,000 rubles a month for all children under the age of three and also proposed a six-month moratorium on tax payments for small and medium-sized businesses.

To combat capital outflows, Putin said all interest and dividend payments that leave Russia should be subject to 15% tax, up from the current level of 2%.

“If foreign partners do not accept our suggestion, then Russia will unilaterally withdraw from these agreements,” he said.

Furthermore, Putin said Russia would tax interest payments on deposits of more than 1 million rubles, a measure he said should help allocate additional funds to fight the economic impact of coronavirus.

Putin did not mention how much his new measures would cost the budget, which is expected to see a 3 trillion rouble shortfall this year from the weak commodity prices only.

Russia has already tapped its rainy day fund, the National Wealth Fund (NWF), for emergency support of the rouble and some other sectors. As of March 1, the NWF held 8.2 trillion rubles, or 7.3% of the gross domestic product.

Additional reporting by Darya Korsunskaya, Elena Fabrichnaya and Polina Ivanova, Editing by Katya Golubkova and Angus MacSwan