Russia Is Seriously Running Out Of Money
Russia, one of the largest countries in the world, has been in a seriously dangerous recession for over two years now. Back in September of 2014, the country had a hefty savings account consisting of almost $92 billion. Now, it sits at just $32 billion. Now that might still sound a lot to you or me, but in the last two years, that’s a lot of money to have spent.
And it’s only getting worse.
The Russian Finance Ministry has predicted that by the end of 2016, the balance will be reduced even further, to around approximately $15 billion, before it runs out completely by the end of next year. Russia is indeed on a slippery slope that doesn’t seem to be improving anytime soon.
This savings account is meant to be the country’s ‘reserve’ fund, used as a last resort should they struggle to make any payments for any essentials the country may need. So if the money is the last resort, where has it all been disappearing to so quickly?
The problem lies with oil. For the 2016 budget, Russia assumed that they would be selling the country’s oil to other countries for at least $50 a barrel. However, thanks to the general money situation across the globe, not just in Russia, barrels of Russian oil were selling for around $44 a barrel. This, of course, altered the planned budget that Russia had made for the 2016 year and has meant that they have had to dip into their “savings” much more than they had planned, sending their recession into an even worse decline.
Falling prices have lead to a drop in just how much income oil provides the country with, going from 2014’s 50% to a stunningly low 37%. The decline of revenue has been so dramatic that a parliamentary meeting is having to go ahead in order to rethink their finances and to plan their 2017 budget more efficiently.
The drop in oil prices has come at a bad time for Russia, who were already struggling with their finances quite a lot due to economic sanctions put in place by Western countries from the EU, including cutting off the most important European countries from Russian financing as well as banning certain products to be imported, all of which have had a hugely negative impact on the countries financial situation.