Russia’s proposed price freeze: don’t do it | beyondbrics

Russia’s proposed price freeze: don’t do it | beyondbrics:

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So, Russia is considering price freezes to provide some relief for stretched household budgets and get the country’s economy going again. Investors are likely to be dismayed. Ordinary Russians should be, too.

Reuters reported that Dmitry Medvedev sent a directive to ministries on Friday asking them to look into the impact of a freeze in regulated prices of services such as gas, electricity and rail transport for the whole of 2014.

This from Reuters:

The Russian government is used to using its control of such costs for political purposes. In a bid to boost electoral support before [Vladimir] Putin’s return to the presidency for a third term last year, it delayed rises in regulated costs for six months, shortly after the first major street protests against Putin.
But it now faces a more difficult equation of how to reheat an economy that has been battered by five years of financial turmoil in Europe and, more fundamentally, by Russia’s failure to reduce its huge dependence on oil, gas and other commodities."

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