Recession reports - Russia sets aside USD 340 billion for package

RIA Novosti reported that Russia's government has earmarked RUB 10 trillion for an anti crisis package which is comparable to the country's annual budget. The press office said that "In total, RUB 10 trillion have been set aside for anti crisis measures. This money will come from the federal budget, the Central Bank and reserve funds."

This is almost double the amount of Russia's overall reserves. As of December 1st, Russia's Reserve Fund was RUB 3.6 trillion and National Wealth Fund, RUB 2.1 trillion.

The government is also ready to provide RUB 92 billion from the federal budget in financial assistance to the so called core enterprises, as well as up to RUB 200 billion worth in state guarantees. The government issued on last Thursday a list containing the names of 295 companies that will receive state support including companies working in transport, energy, oil and gas, communications, media and other sectors.

Mr Alexei Kudrin finance minister of Russian said last Saturday that the country would have a budget deficit of RUB 1.5 trillion to RUB 2.5 trillion, which is almost 6% of GDP. He said that spending would not be cut even if oil prices plunged below USD 20. In the 2009 budget approved by parliament, revenue exceeded expenditure by RUB 1.9 billion but the document assumed an average oil price of USD 95 a barrel. Mr Kudrin said that "Even if oil plummets to USD 20 per barrel, we will not slash spending at least not at the federal level. The government would restructure its spending projections but there would be no reductions. He added that public sector employees, pensioners have nothing to fear.

Economic Development Ministry official earlier said that budget expenditure could be cut by 8% but that the figures did not include the anti crisis measures adopted by the government. Ms Yelena Lebedinskaya of the Economic Expert Group said that anti crisis expenditure could push the total deficit to RUB 9.5 trillion. She said that “Deficit would have to be made up with borrowing limited by the budget code to 1% of GDP and tapping the Reserve Fund.”