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Russia to cut its deficit woes by dipping into its savings

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Russia to cut its deficit woes by dipping into its savings

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Russia will dip into its emergency reserve fund to the tune of more than 50 billion dollars to stop its deficit, hit by falling oil prices and a slumping economy, from rising too far, says the finance ministry.

This would mean more than half of the fund disappearing in less than a year, underlining the fragile state of Russia’s public finances.

The budget is currently being revised based on an oil price of 50 dollars a barrel. When originally drawn up it was based on an oil price of 100. 2015 looks likely to leave Russia with a deficit of 3.7% of GDP, compared to the 0.6% shortfall forecast, mainly due to lower tax revenues.

Of particular concern are several Russian banks, already downgraded and whose ratings are vulnerable.