MOSCOW, September 26 (RIA Novosti)
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The Russian economy will be able to function normally for a year, if global oil prices fall to $60 per barrel, Finance Minister Alexei Kudrin said on Monday in an interview with Russia Today international news TV channel.
"We expect this fall will certainly cause a decrease in our economic growth down to nearly zero or below zero, but in terms of the budget policy we'll be able to cope with this for up to a year," Kudrin said.
Russia's finance minister said on Saturday he expected world oil prices to fall to $60 per barrel in the next one and a half to two years and stay at this level for about six months.
After this, "we'll have to adjust policy and reduce expenditure. As a whole, however, we are ready to provide stability for a year or two and fulfil all our commitments," Kudrin said.
Russia's federal budget for the next three years is based on a forecast of Urals average yearly oil price at $100 per barrel in 2012, $97 per barrel in 2013 and $101 per barrel in 2014.
Russian Deputy Finance Minister Tatiana Nesterenko said last week that a fall in global oil prices to $60 per barrel could force the Russian government to cut the 2012 budget spending but added that this scenario was unlikely.
The average price of Urals blend, Russia's key export commodity, stood at $109.2 per barrel in January-August 2011.
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Any response would likely boomerang on Russia – the partnership between Rosneft and ExxonMobil is a case in point. The United States has hit Russia with a third round of sanctions. This time the Americans went with a higher caliber weapon, targeting Russia’s biggest energy companies (Rosneft and Novatek) and banks (VEB and Gazprombank).