Pressure mounts with Russian Reserve Fund running on empty

Russian Deputy Finance Minister Sergei LavrovThe Russian Reserve Fund will run out of money by the end of next year, Deputy Finance Minister Alexei Lavrov told journalists on Friday, confirming speculation that the country has been burning through its national reserves at an unprecedented rate. Hit by western sanctions and low global prices for oil -which accounts for as much as 44% of GDP – the country’s reserve fund, which was set up to cover shortfalls in the national budget, has shrunk by two thirds since 2014 and has fallen from £67bn to just over £23bn amid a deep economic crisis that has plunged millions of people into poverty and wiped out the advances in living standards achieved during President Putin’s time in office.
Striking Russian lorry drivers
Although approval ratings for Putin – who is set to run in the 2018 presidential election – remain high, they have largely been built on his stabilisation of the Russian economy, and that support may begin to fade as the crisis worsens. Also last week, Prime Minister Dmitri Medvedev acknowledged that pay to workers in both the public and private sectors had fallen short by around $34m, resulting in a series of strikes and demonstrations by lorry drivers, teachers and miners. He even suggested that teachers take a second job to supplement their income.
Russian President Vladimir Putin“I don’t think you can underestimate how bad the situation in Russia is right now,” the CEO of Hermitage Capital Management and long-time Kremlin critic William Bowder told the World Economic Forum summit in Davos in January. “You’ve got oil below any measure where the budget can survive and you’ve got sanctions from the West. Russia is in what I’d call a real serious economic crisis.” Russia could quickly descend into chaos if the money ran out, he predicted. 

Source: thetimes