MercoPress. South Atlantic News Agency

Russian economy battered by the oil price war with Saudi Arabia

Russia’s economy is heavily dependent on oil prices. Russia's budget balances at an oil price above US$ 40 per barrel versus current prices below the US$30s.

Russia, hit by falling oil prices and the coronavirus outbreak, has announced the formation of a US$4 billion fund as part of a package of measures to support the economy.

Prime Minister Mikhail Mishustin said that the new measures would include tax breaks for airlines and companies in the tourism sector, along with an expansion of a program to give preferential loans to businesses.

State companies, such as Gazprom and Rosneft, may also be allowed to delay dividend payments by six months.

The 2020 Russian federal budget includes the receipt of US$ 7.4 billion in dividends from state companies, the paper said. State companies usually pay the dividends in the middle of the year.

Russia’s economy is heavily dependent on oil prices, which suffered their largest one-day drop in nearly 30 years on March 9. Russia's budget balances at an oil price above US$ 40 per barrel versus current prices below the US$30s.

Russia can tap its sovereign wealth fund of more than US$ 120 billion to help fill any budget deficits in the coming years, the nation’s Finance Ministry said last week.

Russia has 63 confirmed coronavirus cases with no deaths so far.

The government has already restricted passenger flights and other transport links with Europe, and Mishustin said last Monday that the border with Belarus would be closed as well.