Russian Economy Declines Faster Than Expected
By Peter Fedynsky
25 May 2009
President Dmitri Medvedev says Russia's economy is declining more than expected, resulting in the country's first federal budget deficit in ten years. Mr. Medvedev is also warning the government not to plan on higher prices for oil and other Russian natural resources.
|President Dmitry Medvedev speaks during a cabinet meeting in the Moscow's Kremlin, 25 May 2009|
The Kremlin leader says expenditures will exceed revenues for the first time in ten years, creating a budget deficit of no less than seven percent of the country's gross domestic product. He notes that is an optimistic figure.
Economic figures recently released by the Russian Federal Statistics Service show the GDP declined in the first quarter of this year by 9.5 percent. The Economic Development Ministry had initially predicted a 2.2 percent drop.
The Russian national budget relies heavily on taxes from the sale of oil and other natural resources, and oil prices have dropped sharply over the past year. Mr. Medvedev says the government's economic planning should not necessarily count on a return to higher prices.
The Russian president says budget plans should be based on conservative estimates of future prices for raw materials. He notes prices could, of course, be higher, which would be better for Russia, but warns the government does not have the right to risk the budget on the possibility.
Unemployment in Russia hit 10.2 percent at the end of April, and industrial production fell nearly 17 percent.