By Paul Goble
In an attempt to maintain their standard of living at a time of falling incomes, ever more Russians are going into debt and spending more than half of their income to service these loans with 60 percent of Russian families report having difficulties paying back loans, often taking new ones to cover the old or borrowing from family and friends.
As a result, according to a new study prepared jointly by the World Bank and the Russian government, there is a great danger that ever more Russians will not be able to pay back the loans they have taken, something that could trigger a banking crisis and lead to a new recession (thebell.io/u-60-rossiyan-problemy-s-vyplatami-po-kreditam-polovine-oni-pryamo-protivopokazany/).
Central Bank head Elvira Nabiullina warned last week that “people are taking credits not as a result of a good life. People with low incomes are applying for credits to support their current standard of living.” But some are acquiring debts in that pursuit beyond their ability to pay them back (polit.ru/article/2019/06/12/credits/).
Antono Siluanov, the Russian finance minister, however, plays down the problem. He argues that “life on credit is normal” and that people around the world are going into debt to support their lives. He says that people aren’t as overextended as the study says. People simply want to get things faster than they did.
Some in the Kremlin, however, are very worried. Andrey Belousoov, assistant to the president for economic issues, says that the rapid growth of consumer credit carries with it “the threat of a recession” and argues that the government must work to draw down the level of consumer debt.