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Unformatted text preview: ssia’s Reserve Fund suffering, the President told a press conference after
the Russia-EU summit held close to St. Petersburg on Monday. "This year, we calculated the
revenue part of the budget on the basis of $100/bbl, and the price was later increased to $115/bbl.
Everything beyond $100/bbl will go to the reserve fund. That is, if the price is below $115/bbl we
will have less revenue going to the reserve fund," he specified. 6|Page Russian Oil DA Affirmative BDL No Internal Link – Oil Decline Won’t Hurt Russia’s Economy
[____] [____] High prices don’t transfer into the real economy
Lidia Kelly , Reporter @ Reuters, 2011
(Russia's economy struggles for sustainable growth, May 18th,
Russia's economy is struggling to attain sustainable growth despite the surge in prices for its
oil exports, data showed on Wednesday, pointing to another tough decision on official interest rates
later this month. Industry output grew at its slowest rate in 18 months in April, while producer prices
rose more than forecast and weekly consumer inflation, stuck at 0.1 percent, underlines the
conflicting pressures on the central bank. Pledging to keep full-year inflation below 7.5 percent ahead
of presidential elections in March 2012, the central bank is expected to continue tightening monetary
policy -- but a sluggish economy will complicate its decision-making on how to control prices and
manage rouble appreciation driven by high oil prices. Investors have been scrutini zing data for clues
on the central bank's move after the regulator unexpectedly raised all key rates last month, including
the benchmark refinancing rate. The latest data, including Monday's figures showing gross domestic
product growing a weaker than expected 4.1 percent year-on-year despite surging oil prices,
suggests that emerging Europe's largest economy is struggling. "We would have expected that
given the high oil prices something of this would transfer to the real economy, but the big
story is inflation, which is eating into the real income of consumers," said David Oxley, an
emerging markets economist at Capital Economics in London. Crude has held above $100 per
barrel for a third month in a row -- more than $30 above what had been initially assumed in the 2011
budget -- ensuring fresh cash inflows into the economy and propping up Russia's trade and current
account surplus. The Economy Ministry said late last month that it was relying on industry to put the
economy onto a sustainable path to 4.2 percent gross domestic product growth this year.
"Manufacturing sectors of the industry will be the drivers of economic growth in 2011, with growth
dynamics of 7.5 percent," the ministry said in a document describing economic scenarios. But while
manufacturing grew 5.3 percent year-on-year in April, it was down 3.6 percent on the month,
Wednesday's data from the Federal Statistics Service showed. Extraction of raw materials, including
oil and gas, was also down on the month, after a period when rising crude prices encouraged
production. "Industry in Russia strongly reacts to ch...
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