Alexei Kudrin, Russia's former finance minister Photo: AFP PHOTO / DIMA KOROTAYEV
The Russian economic crisis took a fresh turn on Monday after the central bank bailed out a mid-sized lender and the country’s former finance minister warned the economy faces an economic crisis.
The Central Bank of Russia (CBR) said on Monday that a plan to loan Trust bank an amount of up to 30bn roubles (£343m) had been approved.
Buffeted by a wave of sanctions as a result of tensions over Ukraine, geopolitical uncertainty, and falling oil prices, Russia’s banking sector has been singled out as particularly vulnerable.
Anna Stupnytska, an economist at Fidelity Solutions, said that “the risk of a sovereign default is low, it’s the corporate sector where the main vulnerabilities lie, and banking in particular”.
“Due to sanctions, companies cannot refinance their debt as access to international markets has been essentially cut off”, she went on to say.
Meanwhile Alexei Kudrin, a former finance minister for Russia said: “Today I can say that we have entered or are currently entering a full-blown economic crisis. Next year we will feel it in full force.”
Analysts have warned that the Russian economy will not improve in the long-term unless either the oil price or relations over Ukraine improve.
“As for what the president and government must do now, the most important factor is the normalisation of Russia's relations with its business partners, above all in Europe, the US and other countries”, Mr Kudrin went on to say.
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