Forgiving of Russians’ Overdue Utility Bills Predicted for 2024

Forgiving of Russians’ Overdue Utility Bills Predicted for 2024

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Recently, experts have increasingly been talking about a sharp drop in the Russians’ incomes. Previously, the decline in living standards in Russia was explained solely by the lack of attention from the federal center to the internal socio-economic policy, depressing economic factors and other issues.

In 2020, however, the situation worsened against the backdrop of the COVID-19 pandemic and restrictive measures, as most residents not only began to earn less but really might have lost their usual income.

Of course, there were immediately pessimistic reports from various statistical institutes on a yet another record increase in people’s indebtedness and overdue payments in the housing and utilities sector.

For example, according to Vitaly Kalugin, a Russian financial analyst and economist, the growth in debts for utilities might continue in 2021. To his thinking, this phenomenon will be caused by an increase in utility rates. Meanwhile, according to him, the Russians in the foreseeable future might get rid of their debts for "public utilities." In Kalugin’s opinion, this might happen in the run-up to the presidential elections in 2024.

It is worth noting that earlier Vitaly Korolev, the deputy head of the Federal Antimonopoly Service [FAS], unveiled some highly unwelcome news. He said that in 2021 Russian utility providers would significantly increase rates for their services. On the average, they might go up 4%, although a specific index of the increase is approved for each individual constituent region of the Russian Federation. Price changes should be expected as of July 1, 2021. However, at the beginning of the year and in late spring, no such changes are forthcoming.

In this regard, Vitaly Kalugin says that higher rates are likely to bring about the new debts for housing and utility services. He believes that by 2024, the number of debtors might be much higher than at the end of 2020. He said that in 2 to 3 years, possibly, the government will take on people’s debt for "utilities" because in 2024 the country is to hold the next presidential election. And the authorities have a habit of to making pretty grand gestures to the rank-and-file in the run-up to elections. Kalugin believes this is exactly what a large number of the residents who deliberately delay paying their utility bills are counting on.

However, there is also an adverse opinion. For example, according to Maxim Krivelevich, an economist and associate professor of the Department of Finance and Credit at Far East Federal University’s School of Economics and Management, the government should not and might not assume the debts for utility bills as this would create a situation where people are actually given money. At the same time, the distribution will only affect the debtors while those who regularly pay their bills, will have to be left with nothing in this case. Moreover, he believes that increasing utility rates is an effective fiscal measure on a par with increasing VAT and fuel prices. In addition, Russians do not oppose it as strongly as a direct increase in taxes.

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