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  Tuesday, September 17, 2019
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Russia is facing its first budget deficit for a decade
Russia is facing its first budget deficit for a decade in 2009, but will make up the shortfall with money from the Reserve Fund, a Kremlin aide announced on Wednesday.

Arkady Dvorkovich refused to specify the figures involved, saying that 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% from a record 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 oil prices plunged.

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

It quoted an official from the Economic Development Ministry as saying that a deficit is inevitable and would be 3%-6% of gross domestic product, while a Finance Ministry official said the working figure for the shortfall was 5% of GDP.

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


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