Crimea will have its own dedicated ministry working to develop the economy of the peninsula that has been incorporated into Russia earlier this March.

      Also, investors working in Crimea’s special economic zone will be exempt from any federal taxes.

      Earlier, Russia-IC reported that the government decided to offer tax privileges to companies seeking to expand their operations to Crimea during the remaining months of 2014.

      The Ministries of Finance and Economic Development have been ordered to draft the necessary bills.

      Earlier, the Economic Development Ministry said Crimea’s infrastructure needs some $5 billion in investment, both private and public.

      There’ve been many concerns about the economic impact of Russia’s move to incorporate Crimea.

      The Russian economy is unlikely to rise above 2 percent in 2014 amid investor uncertainty over the possible impact of sanctions, says the Economic Development Minister.

      According to Alexey Ulyukayev, GDP is expected to grow 1.8-1.9 percent undermined by capital flight worth $100 billion.

      A military invasion of Crimea would cost the Russian economy some three percent of GDP, says Vedomosti.

      Earlier, Russia-IC reported on the possible repercussions of sanctions and investors’ fears on the pace of economic development.

      For example, Bank of America Merrill Lynch forecast that Russia’s GDP would shrink some three percent. The transit of natural gas to European consumers worth $30 billion may be disrupted, too.

      The EU may eventually block the construction of the South Stream pipeline and switch to other energy sources in a move towards an economic boycott.

      Public spending is bound to go up to pay for Crimea’s absorption. The Russian authorities have pledged financial aid to the residents of the autonomy whose budget is facing a $1 billion deficit.