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Russia May Use Reserves; Ukraine's Outlook Sags
A WSJ NEWS ROUNDUPArticle
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MOSCOW -- Russia may have to tap into rainy-day reserves of billions of dollars to help state finances through the economic crisis and declining oil profits, while Ukraine unveiled new industrial production figures that showed the country moving quickly toward a recession next year.
Russian Finance Minister Alexei Kudrin's statement came as the ruble and Russian stocks continued to fall as the country struggles through its worst economic crisis in a decade and as the Central Bank said it will scale back its defense of the national currency. The country's two chief stock exchanges were again shut after sharp stock declines and the central bank spent about $2 billion defending the currency early Wednesday, traders said.
In remarks before the Russian upper house of parliament, Mr. Kudrin forecast oil prices to average $50 a barrel next year and $55 in 2010, but said "it would not affect the spending plans in any way."
The Russian government had previously forecast oil prices at $95 a barrel for the 2009 budget, but Urals blend crude -- the primary kind of oil produced by Russia -- was down to $53 Wednesday.
To make up for the state's lower oil profits, Mr. Kudrin said the government was considering tapping the massive Reserve Fund. The fund consists of oil taxes and was set up several years ago to give the government a cushion against economic blows. Before the crisis hit, talks of tapping the fund was all but taboo.
"We will be using the Reserve Fund if oil profits are less than they are described in the budget," Mr. Kudrin said.
Meanwhile, in neighboring Ukraine, industrial output plunged almost 20% in October from October 2007 -- the biggest drop since early post-Soviet days. The fall highlighted the decline in world demand for the country's steel exports and moves the country closer to a recession next year.
Ukraine agreed to a $16.5 billion loan from the IMF last month, but after the data analysts question whether that higher-than-expected amount would be enough to stop Ukraine's economy from entering free fall.
Political instability, almost constant since the 2004 "Orange Revolution" brought pro-Western politicians to power, showed little signs of abating. President Viktor Yushchenko acknowledged that a snap poll he called wouldn't take place by the end of the year and parliament sacked its chairman.
Other data Wednesday from the State Statistics Committee showed October industrial output plunged 19.8% year-on-year, the third month in a row output fell year-on-year.
A WSJ NEWS ROUNDUPArticle
Comments
more in Economy »Email Printer Friendly Share:
Yahoo Buzz facebook MySpace LinkedIn Digg del.icio.us NewsVine StumbleUpon Mixx Text Size
MOSCOW -- Russia may have to tap into rainy-day reserves of billions of dollars to help state finances through the economic crisis and declining oil profits, while Ukraine unveiled new industrial production figures that showed the country moving quickly toward a recession next year.
Russian Finance Minister Alexei Kudrin's statement came as the ruble and Russian stocks continued to fall as the country struggles through its worst economic crisis in a decade and as the Central Bank said it will scale back its defense of the national currency. The country's two chief stock exchanges were again shut after sharp stock declines and the central bank spent about $2 billion defending the currency early Wednesday, traders said.
In remarks before the Russian upper house of parliament, Mr. Kudrin forecast oil prices to average $50 a barrel next year and $55 in 2010, but said "it would not affect the spending plans in any way."
The Russian government had previously forecast oil prices at $95 a barrel for the 2009 budget, but Urals blend crude -- the primary kind of oil produced by Russia -- was down to $53 Wednesday.
To make up for the state's lower oil profits, Mr. Kudrin said the government was considering tapping the massive Reserve Fund. The fund consists of oil taxes and was set up several years ago to give the government a cushion against economic blows. Before the crisis hit, talks of tapping the fund was all but taboo.
"We will be using the Reserve Fund if oil profits are less than they are described in the budget," Mr. Kudrin said.
Meanwhile, in neighboring Ukraine, industrial output plunged almost 20% in October from October 2007 -- the biggest drop since early post-Soviet days. The fall highlighted the decline in world demand for the country's steel exports and moves the country closer to a recession next year.
Ukraine agreed to a $16.5 billion loan from the IMF last month, but after the data analysts question whether that higher-than-expected amount would be enough to stop Ukraine's economy from entering free fall.
Political instability, almost constant since the 2004 "Orange Revolution" brought pro-Western politicians to power, showed little signs of abating. President Viktor Yushchenko acknowledged that a snap poll he called wouldn't take place by the end of the year and parliament sacked its chairman.
Other data Wednesday from the State Statistics Committee showed October industrial output plunged 19.8% year-on-year, the third month in a row output fell year-on-year.
