Russian President Vladimir Putin attends his annual end-of-year news conference in Moscow, December 18, 2014. The rouble edged lower against the dollar on Thursday, with traders saying Putin had offered few concrete measures at his end-of-year news confer
Russian President Vladimir Putin attends his annual end-of-year news conference in Moscow, December 18, 2014. The rouble edged lower against the dollar on Thursday, with traders saying Putin had offered few concrete measures at his end-of-year news conference to pull Russia out of a crisis. Reuters/Stringer

Despite Russian president Putin's unflagging confidence to tackle Russia's economic crisis, fuelled by falling ruble and sinking oil prices, scathing criticism on the way the economy is handled coupled with concerns about Russia's economic future are coming to the fore.

Advocating the need for mending ties with the West to overcome the economic crisis, Russia's former finance minister Alexei Kudrin hit out at the Putin regime for failing to fix the country's economic woes. "The desire to preserve the sovereignty of the Russian Federation does not contradict the possiblity of preserving Russia as a reliable business partner," Kudrin told a press conference on Monday.

Russia is facing the worst crisis of a rapidly deteriorating economy throttled by international sanctions, massive capital flight, devaluation of the ruble by 50 percent. Plunging oil prices continue to rattle the economy, which is highly dependent on energy exports, reported Turkish Press. Kudrin used the occasion to target Putn's economic policies and rued the economic isolation of Russia. He pointed to the way emerging markets are maintaining their sovereignty even while maintaining their economic, trade and financial relations with the West. He said Russia's true crisis will unfold in 2015 and squarely blamed the government for pushing the country into a full blown economic crisis and failing to tackle its financial problems fast enough.

Consequences

Kudrin expressed the fear that the GDP growth would shrink sharply if the price of oil continues to hover around $60 per barrel. This will drag Russia's GDP by 4 percent, Kudrin predicted. The central bank forecast of 2014 GDP growth was a flat 0.6 percent, while official government forecasts negative growth. The former finance minister warned about the risk faced by Russia on debt downgrade to junk status in 2015, reported Reuters. "We are moving steadily to double-digit inflation," Kudrin warned and noted prices may rise between 12 and 15 percent. Kudrin is hailed by investors for his contribution in building Russia's $170 billion sovereign wealth funds.

Bank Bail Out

Meanwhile, Russia bailed out a mid-sized bank for about $500 million to save it from sinking under the weight of bankruptcy. The slide in the value of the ruble in the wake of falling oil prices has strained the banking system. The Central Bank said Monday that it will provide a 30-billion ruble loan to help the Trust Bank to stay afloat, reported Yahoo News.

Meanwhile, President Putin vowed that the country has the resources to overcome the economic problems. But this has not convinced Kudrin, who said Russia may slip into recession even if oil prices are going to be as high as $80.

(The writer can be contacted at kalyandelhi@gmail.com)