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15 Feb, 2009 15:40

‘Russia’s financial system under control’

Rising prices, a lack of jobs, a plunging national currency… Russians are feeling the pinch of the global economic downturn.

The government has been attempting to shore up the dam, saying the situation is under control, and that the country will make it through the hard times.

The Russian president’s view on the country’s economic forecast for the near future is ‘not pleasant and rather complex’. The Finance Ministry expects Russia’s inflation to rise to 14 per cent this year. President Medvedev believes Russia’s financial system is under control. He says that, unlike those countries that didn’t cash during the boom years and are on the verge of bankruptcy now, Russia is protected by its reserve funds.

“Our own financial and economic state, by contrast, is absolutely stable. We are passing amendments to the budget. Of course, it’s a difficult budget, a budget with a deficit… But we nevertheless, while using funds from the reserve fund, too, will be able to cover all our expenses, including the social ones, both this and next year, and go through the most difficult stretch of the financial crisis,” Dmitry Medvedev said.

Russia’s economic output managed to rise last year, while the GDP of most developed economies like the U.S., Japan and the UK are already in recession. However, the president sees rising unemployment as the biggest problem now. The state is planning to raise the unemployment allowance as well as create new jobs and retrain specialists.

“Jointly with the regions we are drawing up specialised programs to support new jobs. Those programs will be funded both by the federal side, I mean this country, the Russian Federation, and the regions. We are allocating additionally 44 billion roubles for these purposes, and this money should create new jobs, including small-business jobs and jobs in new industries,” the President said.

As for the weakening rouble, which has already depreciated by more than 30 per cent, the president said economic circumstances made that inevitable, but he has praised the way the central bank dealt with it this time: gradually, compared to the sharp fall of 1998.

“The current rouble rate, according the central bank reflects the real state of our currency, its solvency. The central bank will monitor the situation and will not allow any jumps,” he said.

Ahead of his planned first meeting with U.S. President Barack Obama at the G20 summit in London, Medvedev said he was looking forward to an open, honest and productive dialogue.

“The signals I have been receiving from the United States, from the presidential administration, and from the president personally, look encouraging.”

The U.S. has indicated that nuclear disarmament will be an agenda priority. Both sides have already agreed on transporting NATO’s non-military cargo to Afghanistan through Russia. It is expected the talks will be less about photo opportunities, and more about real deals.