Likelihood of external shocks that would put Russia into crisis similar to 2008 is low – MinFin

MOSCOW. Nov 21 (Interfax) The likelihood of external shocks, which would threaten the Russian economy with a crisis similar to that of 2008 is low but Russia cannot control such risks and needs to be prepared for this possibility, Deputy Finance Minister Alexei Moiseev told journalists on Wednesday.

“We believe that the likelihood of such an external shock is very low. We don’t think any of the risks would trigger a collapse like in 2008,” he said.

At the same time, he said that “all these risks are out of our control” and, therefore, it is necessary to be prepared for any of the possible risks, as well as a situation where prices for energy products decline.

“We are an open economy and Russia, essentially, is the price-taker vis-a-vis commodities markets. We have a certain circle of commodities, which both determine our payments balance and the state of our budget but we don’t have the option of influencing the prices for these commodities,” he said.

He added that a floating exchange rate and the introduction of budget rules might reduce Russia’s susceptibility to possible negative consequences of external shocks.

Oil prices, counting for inflation, are at their highest level for 150 years, he said. At the same time, it is should be recognized that the world still does not have a satisfactory way to forecast prices for the short and midterm. “This means that we should be ready for a situation where we might not be sure about oil prices. Budget regulation and a floating exchange rate would allow us to survive when there isn’t full clarity regarding oil prices,” he said.