Russia 'could run out of cash reserves in 2017'
The Russian government is ploughing through its foreign exchange reserves at such a fast rate that it could use up its rainy day fund by 2017, government officials have claimed.
Despite being a major oil producing nation, pension pots may have to be raided to cover budget shortfalls, on which much of the reserve funds have already been spent.
Russia’s economy has been in recession for nearly two years as oil prices have slumped and Western sanctions – imposed in protest at the Russian intervention in Ukraine – have bitten hard.
“The Reserve Fund, as I remember, will be used up over the next year," deputy finance minister Alexei Lavrov said.
International analysts agree. "At the current rate, the fund would be depleted in mid-2017, perhaps a few months later," said Ondrej Schneider, chief economist at the Institute of International Finance.
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The Reserve Fund had to be used three times so far this year to cover holes in the federal budget, most recently in August, when billions in Russian reserves of euros, dollars and pounds sterling were sold to cover a gap of 390bn rubles (£4.5 billion) in the budget.
The fund is intended to keep the country’s finances running smoothly when money is tight, but it has decreased in value dramatically in just two years, falling from £67bn in 2014 to just £23bn in September 2016. It will be even less by Christmas, with estimates placing its value at £11bn by the end of Year.
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