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Russia's Rainy Day Fund - 10/3/16

Some have heaped praise on Russian President Vladimir Putin recently.  But while America is experiencing a period of accelerating income growth and low inflation, the Russian government is running out of cash. 

According to data from the Russian Finance Ministry and as reported by CNNMoney, Russia’s rainy day fund has shrunk to just thirty two billion dollars.  Back in September of twenty fourteen, he Russians had nearly ninety two billion in their rainy day fund – that was just before oil prices began to collapse.  Analysts expect matters to deteriorate, with the fund shrinking to only fifteen billion dollars by the end of the calendar year and then dry up by mid-twenty seventeen. 

Russia’s rainy day fund is designed to cover shortfalls in the nation’s budget during period of low oil and gas revenues.  Russia’s twenty sixteen budget is based on the assumption that the country would be able to sell its oil for fifty dollars per barrel, but the average oil price during the year’s initial eight months was less than forty three dollars per barrel. 

In response to Russia’s growing economic woes, the nation’s central bank has been cutting interest rates in an attempt to kick start the economy.  Ongoing economic sanctions imposed by Western nations will render recovery more difficult.  

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.