While forecasting an economic recovery soon, the Russian government draws from its reserve funds to cover a budget gap. Photo by DyMax/Shutterstock
MOSCOW, Sept. 6 (UPI) -- For the third time this year, the Russian Finance Ministry said it pulled money out of its reserve funds in an effort to cover a budget deficit.
According to a report from Russian news agency Tass, the government transferred $6 billion from the reserve fund to cover a gap in the budget, thus depleting the fund by 18 percent from August. In April and May, the government pulled $6 billion from the fund each month to cover the deficit.
A July report from the International Monetary Fund said the Russian economy would remain in recession through the remainder of 2016 because of lower oil prices and sanctions imposed by Western powers in response to the Kremlin's stance on crises in Ukraine.
Economists at the IMF said Russia was moving through a fiscal adjustment period that started in 2015, though there are prospects for "modest" recovery starting in 2017.
In early September, the Russian Central Bank said inflation was within target and external conditions were favorable for the oil-based economy. The government's monetary policy was paying off and, despite pressures on gross domestic product, "one may say that the economy picks up slowly," the bank said.
Central Bank Gov. Elvira Nabiullina said the trajectory for oil, one of the main sources of revenue for Russia, was highly uncertain.
Crude oil prices have drifted lower in the latter half of the summer as supplies build against a backdrop of modest global demand. Oil prices so far this year dropped below $30 per barrel, topped the $50 range and had settled in the mid-$40 range until Monday when Russia and Saudi Arabia issued a joint statement expressing support for extraordinary action to correct market volatility.
"The ministers recognize the current challenges in the supply side of the global oil market," the joint statement read.
A proposal to freeze crude oil production levels at early 2016 rates collapsed this year along multilateral fissures. Some analysts have said oil prices have recovered to the point that wasn't supportive of a firm deal.
The Kremlin in March warned a price above $50 per barrel might skew markets heavily toward the supply side as energy investors look to capitalize on the forward momentum for crude oil.