“They can’t afford to run deficits at all. By the end of next year there won’t be any money left in the oil reserve fund,” said Lubomir Mitov from Unicredit. The finance ministry admits that the funds will be exhausted within sixteen months on current policies.
Alexei Kudrin, the former finance minister, said the Kremlin has no means of raising large loans to ride out the oil bust. The pool of internal savings is pitifully small.
Any attempt to raise funds from the banking system would aggravate the credit crunch. He described the latest efforts to squeeze more money out of Russia’s energy companies as the “end of the road”.
Mr Kudrin resigned in 2011 in protest over Russia’s military build-up, fearing that it would test public finances to breaking point. Events are unfolding much as he suggested.