Sectors of Russian economy shrinking on coronavirus, oil price fall

MOSCOW, Mar 18 (PRIME) -- The entire sectors of Russia’s economy are shrinking on the back of a slump in crude prices and the spread of coronavirus, Finance Minister Anton Siluanov told the Federal Treasury on Wednesday.

“You can see that we have lately encountered a difficult situation for Russia stemming from a fall in prices for our energy exports, which has been a major risk for our economy. But another very serious factor, the coronavirus, has joined now,” he said.

“And virus itself is not the point, the point is that entire sectors of the economy are shrinking. We have already mentioned transportation, including air transportation, tourism, small businesses, and a number of other sectors will follow. We can see that purchases of durable goods, including cars, are decreasing.”

That is why the situation is seen as developing in line with a pessimistic scenario, and the economy is deviating from the previously forecasted macroeconomic figures, he added.

Siluanov also said that a fall in oil prices will reduce the budget revenue by almost 3 trillion rubles so money of the National Wealth Fund will be used.

“Now we need to focus the resources on targeted and effective support of those industries and regions, businesses, which cannot survive without the state aid,” he added.

The minister also said that the Federal Treasury will start placing available budget funds, including foreign currency, in repo deals, with Eurobonds as pledges.

“We plan to improve the single account system, and will begin placing funds under repo agreements through organized trades… We should also introduce additional tools for placement of the federal budget’s funds – repo deals in foreign currency and repo deals with Eurobonds as pledges. The tools will start working this year,” he said.

The Federal Treasury, the Finance Ministry and the central bank currently place budget funds on deposits with banks if the single account of the federal budget tops the level necessary to pay for obligations.

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