Russian minister sees economy shrinking 4 pct in 2015

Russian minister sees economy shrinking 4 pct in 2015

Russian minister sees economy shrinking 4 pct in 2015

Finance Minister Anton Siluanov (2nd L) is seen during a meeting with Prime Minister Dmitry Medvedev. AP Photo

Finance Minister Anton Siluanov said on Dec. 26 that the Russian economy could contract by 4 percent next year and that the budget could have a deficit of more than 3 percent of gross domestic product if oil prices average $60 a barrel.

Siluanov also told journalists that his ministry had recalculated its budget forecasts to take into account oil prices at $60 a barrel and that he expected the ruble’s average exchange rate to be around 51 rubles per dollar in 2015.

He added that state bank VTB could get 100 billion rubles ($1.9 billion) from the National Wealth Fund by the end of the year and 150 billion rubles more in 2015, while Gazprombank could get 70 billion rubles this or next year.

“We need to have our budget break even at $70 per barrel by 2017,” said Siluanov.

Russia’s government also imposed informal capital controls this week, including orders to large oil and gas exporters Gazprom and Rosneft to sell some of their dollar revenues in a bid to shore up the ruble.

Russians have kept a wary eye on the exchange rate since the collapse of the Soviet Union, when hyper-inflation wiped out their savings over several years in the early 1990s.

On Dec. 26, Russian authorities also significantly scaled up rescue funds for Trust Bank, saying they would provide up to $2.4 billion in loans to bail out the mid-sized lender.