Russia plans to reduce Abkhazia financial dependency
Russia reduces financial assistance to Abkhazia
Russia intends to gradually reduce financial assistance to Abkhazia. Moscow expects that the republic will soon move to a more independent economic format, reducing dependence on Russian subsidies, which make up about half of its budget.
The planned visit to Abkhazia by Dmitry Volvach, Deputy Minister of Economic Development of Russia, curator of projects implemented in Abkhazia on subsidies from the Russian budget as part of the Investment Program for the Social and Economic Development of Abkhazia, apparently had a different purpose.
Moscow is signaling to the Abkhazian authorities that in the unprecedented sanctions imposed by the collective West against Russia because of the hostilities in Ukraine, it is time for the republic to learn how to make money on its own.
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Now direct financial injections from Russia make up half of the revenue side of the budget of Abkhazia, thus, the task has been set for the next three years, if not to reach self-sufficiency, then at least significantly reduce the amount of Russian subsidies.
For sure, the Russian official personally informed the President of Abkhazia about this, although the press service of Aslan Bzhania does not mention this fact in its release about this meeting.
However, upon returning to Moscow, Dmitry Volvach gave a lengthy interview to the Russian Tass state agency, in which he announced the plans of the Russian government:
“I set a task for the employees and I say to the leadership of the republics (Abkhazia and South Ossetia): Now we have a task for you so that you do not receive more from us, but on the contrary, that you begin to slowly become less dependent on us. That is, we want to gradually reduce support for wage equalization, but do it in such a way that wages do not fall. This can be done only with the growth of the economy.
The Deputy Minister of Economic Development of Russia believes that Abkhazia needs to attract investors, especially when “interest in the republics is growing every year”. But for this it is necessary to change the legislation, improve the investment climate, simplify customs and tax regulation.
“All the best that is in Russia should be brought there in order to guarantee the rights of investors who come there. And then – those who work there, pay taxes there. These taxes go to the republican budget, and payments are made due to the increasing budget, the economy develops”, Dmitry Volvach shares his vision of how Abkhazia can revive the local economy, and thereby compensate for the losses from the reduction of direct Russian subsidies to the Abkhazian budget.
Volvach also named the timeframe for the implementation of these changes – three years.
“I really hope that in the next budget cycle we will not just live for three more years and these republics will exist with us for three years, but that in three years, after this budget cycle, we will get a completely different level of public administration, budgetary security, investment attractiveness in the republics. We will see Abkhazia becoming less dependent on Russia’s support”, said the Deputy Minister of Economic Development of Russia.
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