'Russia is seriously running out of cash'

Caporegime
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Following 18 months of recession, Communist dictator Vladimir Putin has opened crisis talks with the Federal Treasury after it was revealed that the government is preparing to steal from the national welfare fund in a desperate attempt to save Russia's collapsing economy:

Russia is bleeding cash at an alarming rate. After almost two years in recession, the country's rainy day fund has shrunk to just $32.2 billion this month, according to the Russian Finance Ministry.

It was $91.7 billion in September 2014, just before oil prices started to collapse. And it's getting worse. Analysts expect the fund will shrink to just $15 billion by the end of this year and dry up completely soon after that.

"At the current rate, the fund would be depleted in mid-2017, perhaps a few months later," Ondrej Schneider, chief economist at the Institute of International Finance, wrote in a note this week.

The government's reserve fund is designed to cover shortfalls in the national budget at times of low oil and gas revenues. Russia's 2016 budget is based on the assumption the country would be able to sell its oil for $50 per barrel.

But the average oil price in the first eight months of the year was less than $43 per barrel. Oil now makes up just 37% of all government revenues, compared to roughly 50% just two years ago. The government will reveal next year's budget after a parliamentary election this weekend.

This slump means the government is having to tap the rainy day fund again and again. The government indicated that once the reserves are depleted, it may have to turn to its welfare fund.

The Kremlin says the welfare fund has over $70 billion in it. The fund is not intended to cover budget shortfalls, but rather to finance future pensions and large-scale investment projects.

(Source).

$70 billion welfare fund for a nation of 143.5 million people. Good luck with that!

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In January it was reported that Russians are losing patience with Putin's high taxing government as the economic crisis deepens. Since then, the situation has only grown worse.

Russians are waking up to the harsh reality that the economic crisis is nowhere near over, despite what President Vladimir Putin has been telling them.

There have even been several protests against the economic crisis -- a rare sight in a country where demonstrations don't happen very often.

Ordinary Russians are suffering because of the devastating impact of low oil prices and Western sanctions. Real wages fell 9.5% in 2015, with an average Russian earning just over 30,300 rubles ($385) a month last year, official data show.

At the same time, prices are rising fast. Inflation hit 12.5% in 2015 and could take longer to slow down if the ruble continues to fall. The currency has plunged since the start of the year, hitting an all-time low of 85 rubles per dollar on Thursday.

Official statistics show that over 20 million Russians, roughly 14% of the population, are now living in poverty. That compares with 16 million in 2014.

(Source).

Russia is totally screwed. Putin's been kicking the can down the road for years, but he can't keep it up forever. His only hope is to maintain the illusion until he's safely out of office.
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Whilst the price of oil is undoubtedly the reason for their budget shortfall, I'd be curious to know what the impact of the sanctions placed on Russia after the Ukraine kerfuffle have had.
 
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