Russia, the world's largest oil producer after Saudi Arabia, has enough money to survive any external shock, including a prolonged plunge in the price of crude, President Vladimir Putin's top economic adviser said.
Russia can go „two or three years” without problems if the price of oil plunges to $18 a barrel because of its financial reserves, Arkady Dvorkovich said on the sidelines of a conference, organized by The Economist, in Moscow today. The budget is based on a price of $27, he said. Russia's benchmark blend of crude, Urals, is currently trading at about $54. Russian leaders have warned that growth, which has been bolstered by oil and gas and helped the country pay back billions of dollars in debt, may slow as energy prices fall. The Economy Ministry yesterday lowered its prognosis for economic growth this year to 6.05% from 6.2%. „We have sufficient financial reserves to meet any risks,” Dvorkovich said today. „There won't be any economic shocks.” Record global energy prices have been a boon to Russia, whose economy has expanded for the past nine years after it defaulted on domestic debt, causing the ruble and domestic banks to collapse. Since then, Russia's foreign-currency reserves have surged to about $310 billion and its oil fund, a cushion against falling crude prices, has surged to about $100 billion. The Economy Ministry yesterday cut its forecast for oil prices for 2007 to $55 a barrel from $61. Oil, natural gas and petrochemicals accounted for 68% of Russia's total exports last year, according to the Federal Customs Service. „Lower than expected oil prices will not have a dramatic effect on budget performance,” Deutsche UFG said in a written note today. (Bloomberg)