icon bookmark-bicon bookmarkicon cameraicon checkicon chevron downicon chevron lefticon chevron righticon chevron upicon closeicon v-compressicon downloadicon editicon v-expandicon fbicon fileicon filtericon flag ruicon full chevron downicon full chevron lefticon full chevron righticon full chevron upicon gpicon insicon mailicon moveicon-musicicon mutedicon nomutedicon okicon v-pauseicon v-playicon searchicon shareicon sign inicon sign upicon stepbackicon stepforicon swipe downicon tagicon tagsicon tgicon trashicon twicon vkicon yticon wticon fm

Finance Minister sets out bleak budget forecast

Finance Minister sets out bleak budget forecast
Finance Minister, Alexei Kudrin has set out a radically changed budget outlook for Russia, showing a mounting global economic recession will hammer government revenues and create a massive shortfall.

Addressing the State Duma on Friday Kudrin pulled no punches, saying that 2009 could see the Russian Budget undergo a 40% drop in revenues – worth 4.4 Trillion Roubles or $124 Billion.

With the budget originally predicated on Russia’s major export – crude oil – being priced at about $95/bbl, compared with a current price of about $41/bbl, inflation running at 13%, and GDP growth at just 0.2%, the Finance Minister warned about the budgetary implications if no adjustments are made

“If we don’t change our budget targets, and simply replace this lost revenue with money from the reserve funds, the budget deficit will be 6.1 percent of GDP.”

Kudrin added that over the last 3 months the managed devaluation of the Rouble had contributed to a major fall in investment, in the face of massive forex purchases. He noted however that this had some potential upside when the devaluation finished, providing inflation could be tamed.

“If we also deal with inflation, citizens will again put money into the economy,”

The Finance Minister added,

“For each dollar received by oil companies, they have 30%-40% more roubles, which means, having sold this dollar, an additional 30%-40% in roubles is put into the economy. Therefore, funds in the economy are sufficient.”

Dear readers and commenters,

We have implemented a new engine for our comment section. We hope the transition goes smoothly for all of you. Unfortunately, the comments made before the change have been lost due to a technical problem. We are working on restoring them, and hoping to see you fill up the comment section with new ones. You should still be able to log in to comment using your social-media profiles, but if you signed up under an RT profile before, you are invited to create a new profile with the new commenting system.

Sorry for the inconvenience, and looking forward to your future comments,

RT Team.