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Source: www.asiaecon.org |

RUSSIA TO SOOTH ECONOMIC WOES WITHOUT THE PRINTING PRESS


Prime Minister Vladimir Putin stated that, “Russia won’t resort to printing money to cover a 2009 budget deficit forecast at 7.4 percent of gross domestic product.”  And during this economic down-turn, “resorting to a printing press would be unwise and extremely dangerous.”


Prime Minister Vladimir Putin stated that, “Russia won’t resort to printing money to cover a 2009 budget deficit forecast at 7.4 percent of gross domestic product.”  And during this economic down-turn, “resorting to a printing press would be unwise and extremely dangerous.” 

This is because the rapid production of money will inevitably lead to inflation, which then  lowers the domestic consumer’s purchasing power.   

Putin also told the cabinet in Moscow on Thursday that the government should approach the deficit “by using the reserves that have been accumulated in recent years, or if necessary by borrowing under market conditions.”  He later added that Russia does not yet need to borrow from other nations.  This was reiterated when he said that Russia’s budget “will probably come in with a deficit for the next few years.”  The national reserve fund, which contained $136 billion on March 1, will be used to cover much of the deficit, but cannot be used indefinetly.

As Russia deals with its first deficit in a decade, the government is considering a new 2009 budget to stabilize the economy with $47.9 billion of bailout spending.  This increase in spending will be proposed even as decreasing commodity prices cut revenue by 28 percent. 

The Russian anti-crisis plan, which was modeled after the stimulus plans of both the U.S. and the U.K. includes seven key sections -social welfare, maintaining industrial capacity, boosting domestic demand, promoting small business, tackling corruption, supporting the recession in a decade. 

The global economic crisis is responsible for the slump in prices of: oil, gas, metals and other commodities due to the weakening demand around the world.  Oil prices have plummeted from $95 a barrel to $41 a barrel.  


Source: www.AsiaEcon.org
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Source: www.asiaecon.org |


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