The news is another blow to an economy reeling from weak oil prices and Western-led sanctions in connection with fighting in Ukraine.
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Russian Finance Minister Anton Siluanov prompted more concerns over the health of the Russian economy Tuesday when he said there was a danger that the country’s vast Reserve Fund could be entirely exhausted in 2016 if oil prices stay at their current level.
Speaking to reporters in Moscow on October 27, Siluanov said the budget shortfall for 2015 is expected to be 2.6 trillion rubles ($41 billion).
“This means that 2016 is the past year when we are able to spend our reserves that way”.
The risks of empty state coffers exist due to the low oil price (at $44 per barrel) and the 62 rubles per U.S. dollar exchange rate. The second fund, the National Welfare Fund, has largely been used to support the country’s infrastructure, the Associated Press reported. It has been the main instrument for covering the government’s budget shortfall which has been caused by lower oil prices.
In July, the finance ministry had said it wanted to start replenishing the Reserve Fund if the oil price exceeded $70 a barrel, a far cry from current prices.
Next year could be a tight budget year for Russian Federation.
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As oil prices began to climb in the mid-2000s, Russian Federation chose to set aside a few profits from oil exports into two rainy day funds.
