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Medvedev: Russian economy will endure

Small debt and large reserves equate to durability, Russia's prime minister says.

By Daniel J. Graeber

MOSCOW, Jan. 14 (UPI) -- Russia's economy has the reserve support to adapt to evolving market conditions brought on by sanctions and low oil prices, the prime minister said Wednesday.

Russian Prime Minister Dmitry Medvedev told an economic forum that, with small state debt and adequate reserves, the economy could adapt smoothly to current market conditions.

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"We still have significant reserves which guarantee payments under the state debts and if needed, we can help companies in paying their foreign debts," he said.

Analysis from the World Bank in December finds the Russian economy will face difficulties through 2016 because of the decline in global oil prices. Using an average price of $78 per barrel for 2015, about 35 percent higher than the current price, the bank finds real gross domestic product should contract by 0.7 percent for Russia.

The prime minister's latest comments are in contrast to statements made earlier to his deputies.

"The economic situation is quite problematic to say the least," he said Monday.

Russia's economy is burdened by sanctions imposed by Western powers in response to its role in Ukraine, where pro-Russian rebels are jockeying for more control in the eastern parts of the country. Low oil prices, meanwhile, are hurting a Russian economy that depends on oil and gas exports for more than half of its revenues.

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The Kremlin said the low price of oil has put pressure in the value of the Russian currency and expectations for gross domestic product. The Russian currency was trading near historic lows at around 64 to the U.S. dollar.

Budget losses for Russia next year could be as high as $1.7 billion.

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