posted at 03:50
Author Name: Tomas Hirst
Russia Passes Draft Budget Based On An Alternative Economic Reality
Getty Images/Robert CianflonePresident Vladimir PutinA draft Russia budget for 2015-2017 passed its first reading in the Duma, the country's parliament, Friday despite the Finance Minister warning that is based on an "Alternative economic reality." According to Vedomosti, the independent Russian business daily newspaper, the draft budget is based forecasts an average oil price of $100 a barrel over the next three years, Western sanctions being lifted in 2015 and an acceleration of growth from next year. Since the middle of the year the oil price has been crashing, falling from a high of $115 a barrel in June to below $86 a barrel Monday. Goldman Sachs believes oil will fall to $80 a barrel. EIAThe collapse in the oil price has put huge pressure on Russia's government finances with oil and gas accounting for half of the country's budget revenues. Fears of its impact on the Russian economy have also caused foreign capital to flee the country. The Russian central bank reports that the country has seen $85 billion worth of capital outflows so far in 2014 forcing it to spend over $15 billion of the country's foreign currency reserves propping up the Russian ruble in October alone. The Ministry of Finance is set to propose spending cuts of around 10% of the draft budget with ministry sources briefing that each state program will be considered.

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