Tyler Durden: Vladimir Putin told the state-run TASS news agency that Russia’s economy faces a potential “catastrophic” slump in oil prices, saying, as Bloomberg reports, such a scenario is “entirely possible, and we admit it.”
However, Putin reassures that with reserves at more than $400 billion, the country will weather such a turn of events because “we handle our gold and currency reserves and government reserves sparingly.”
“We’re considering all the scenarios, including the so-called catastrophic fall of prices for energy resources, which is entirely possible, and we admit it,” Mr Putin told the state-run Tass news service before attending the G20 summit.
“Our reserves are big enough and they allow us to be sure that we will meet our social commitments and keep all the budgetary processes and the entire economy within a certain framework”
Declining export revenue from oil and natural gas and the central bank’s attempts to shore up the ruble are threatening to exhaust public finances. The non-oil deficit exceeds 10 percent of economic output at a time when the central bank’s defense of the ruble has cut reserves by a fifth from last year’s peak. Still, the currency’s slide helps compensate to an extent as foreign-currency is converted into a larger amount of rubles for the budget.