JRL NEWSWATCH: “Russia, wary of U.S. sanctions, puts saving before growth” – Reuters/Darya Korsunskaya

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“Russia’s drive to fill state coffers to give itself a $200 billion buffer against threats like new U.S. sanctions … will come at the expense of economic growth. … With oil prices high, Russia has been steadily siphoning revenues from its major export into the National Wealth Fund (NWF). It has also raised oil industry taxes, hiked value-added tax and – in a move that has hurt … Putin’s popularity – sharply increased the pension age. … Under a “fiscal rule”, any revenue from oil prices higher than $40 per barrel goes into the NWF, which is part of Russia’s gold and foreign exchange reserves, held by the central bank. * * * Ratings agency Moody’s, which downgraded Russia after the first round of Western sanctions, said last week it might lift the sovereign to investment-grade as early as next year if Moscow keeps tight fiscal control.”

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