Russian Economy Faces Wave of Bankruptcies Amidst High Interest Rates
Russia’s 21 percent key interest rate, implemented to combat inflation, is severely impacting businesses. A government-linked report reveals that 20 percent of manufacturing firms allocate two-thirds of their pre-tax profits to debt servicing, indicating a high risk of widespread bankruptcies. This financial strain is exacerbated by reduced access to credit and increased non-payment among businesses. Economists warn that the duration of high interest rates will significantly influence the extent of corporate defaults, potentially forcing the central bank to prioritize economic stability over inflation targets.
John Q. Hosedrinker