Russian Companies Face Bankruptcy Warns Putin Ally

Sergey Chemezov, a close associate of Russian President Vladimir Putin, has raised an alarm. He believes that most Russian companies might go bankrupt due to the sky-high interest rates. Chemezov, who heads the state-owned Rostec, made these comments while speaking to the Federation Council earlier this week. His main concern? The central bank's high-interest rates, which were recently increased by another 2 percentage points to a record 21 percent. He argued that such high rates make it unprofitable for businesses to borrow money. This is especially tough for high-tech companies that rely on loans to complete their production cycles.Chemezov fears that if this continues, many companies will face bankruptcy. He even mentioned the possibility of "stagflation, " a situation where economic growth slows down, unemployment rises, and prices increase. Other business leaders like Alexey Mordashov of Severstal share these worries. They believe the interest rates might do more harm than good in controlling inflation, which currently stands at 8. 4 percent. The central bank, however, sees further rate hikes as necessary to combat inflation driven by high military spending due to the ongoing war in Ukraine.