Jan 14, 2015 4:41 AM

Russian minister promises to limit government spending

The Associated Press

MOSCOW (AP) Russia's finance minister has promised to maintain a tight lid on spending as the country faces its worst economic downturn in 15 years.

Anton Siluanov said an earlier plan to boost government spending by nearly 12 percent this year is unrealistic, and some of the planned expenditures should be cut.

He told an economic forum Wednesday that if oil prices average at $50 a barrel this year, government revenues will drop by around $45 billion compared to an earlier plan.

The Russian ruble lost about half of its value last year under the combined blow of slumping global prices for oil and Western sanctions over Ukraine. The currency dropped about 1 percent in morning trading in Moscow, nearing 66 rubles per dollar.

With oil trading at almost a six-year low, the World Bank on Wednesday sharply revised its predictions for Russia's economy, foreseeing a 2.9 percent contraction in 2015.

Speaking alongside Siluanov, Russia's economic development minister, Alexei Ulyukaev, appealed for Russians to remain calm.

"In a crisis situation, the main thing is to preserve mental calm ... and most of all to think about your own health and the health of your family," he said.

Separately, deputy economic development minister Alexei Vedev predicted inflation could hit 17 percent in the spring. "Peak inflation will come in March and April. In year-on-year terms, inflation in this period could amount to 15 to 17 percent," the Tass news agency quoted him as saying.

Russia's state statistics service reported 11.4 percent annual inflation for 2014, the highest figure since 2008.


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