Russia faces first budget deficit in a decade

December 24th, 2008 - 11:24 pm ICT by IANS  

Moscow, Dec 24 (RIA Novosti) Russia is facing first budget deficit in a decade in 2009 and would make up for the shortfall with money from the Reserve Fund, a Kremlin aide said Wednesday. The aide, Arkady Dvorkovich, refused to specify the figures involved, saying that the calculations varied.

“The deficit is primarily caused by falling oil prices. Therefore, it is absolutely logical to use money from the Reserve Fund to bridge the budget deficit,” Dvorkovich said.

World oil prices have fallen by more than 70 percent from a high of $147 per barrel in July to under $40, as the global economic slowdown has reduced demand for fuel.

Russia’s 2009 budget is based on the average oil price of $95 per barrel. When it was approved, Finance Minister Alexei Kudrin said the country’s financial plans would have to be seriously adjusted if the oil prices plunged.

The Vedomosti business daily reported Wednesday that even with an optimistic oil price of $50 a barrel, the budget would be several trillion roubles short.

It quoted an official from the economic development ministry as saying that a deficit is inevitable and would be 3-6 percent of gross domestic product, while a finance ministry official said the working figure for the shortfall was 5 percent of GDP.

Dvorkovich said that Russia might resort to foreign borrowings to overcome the consequences of the global financial crisis, adding that the Russia would seek loans from foreign markets rather than from the international financial institutions.

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