Russia to Pour $390 Billion Into Continent-Spanning Roads, Sea-Passage to China
December 1, 2019 in News by RBN Staff
source: russia-insider.com
by Ben Aris
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Russia’s RUB25.7 trillion ($390bn) investments planned for the 12 national projects are getting underway and the state will inject the equivalent of a quarter of the value of the whole economy in 2018 into the economy over the investment period, or additional spending of 4% of GDP each year. The lion’s share of investment will go into building roads.
The programme is designed to transform the economy, but it is off to a slow start and actually the planned spending is about a fifth of what is needed to bring the quality of Russia’s economy up to the standard of developed markets, say experts. Moreover, it seems that the Kremlin has bitten off more than it can chew: VTB Capital’s (VTBC’s) chief economist Alexander Isakov said in a report that most of the deadlines are likely to be missed.
“In order to improve the probability of achieving most of its targets, the government might need to increase the volume of allocated resources” from its current level of RUB25.6 trillion ($400bn), said Isakov. However, in a seperate report VTB also said that the bulk of the infrastructure spending will go on roads and there the programme is not so far behind and can catch up over the next two years.
But even if the deadlines are missed the investment itself is expected to have a major positive effect and bring Russia’s infrastrcuture up to the level of Malaysia, if not that of Germany.
Road to somewhere
Investment into roads will take up the largest part of infrastrcure spending and should have the greatest beneficial effect on the economy. Just under half (45%) of all the spending will go on infrastructure and two thirds (63%) of that part of the spending will go on roads alone, with the rest spent on waterways (14%) and railways (20%), plus a little bit (2%) to upgrade airports.
