Keeping Russia's economy afloat proves to be challenging for as Russian authorities may soon ask President Vladimir Putin to reduce military spending. With Russia's current expense on strengthening its military, officials fear that the government will have no choice but to raise taxes, raise the pension age or print new money to prevent further economic collapse.

According to Reuters, Russian authorities believe that the country can still make it through 2015 if the price of crude oil, Russia's main export driver, will remain near current levels. However, economists think that even at the current price of $60 per barrel, the oil price is only a little more than half of what Moscow needs to balance the budget. The Kremlin is quickly losing money.

Without drastic action, Russian officials are becoming less confident about the country's future in 2016-17 if global oil prices continue to drop towards $40. A senior government official told Reuters about the effects of an unchecked deficit on any of the country's two funds set up from previous oil revenues.

The unidentified official claimed that if no spending was cut, the deficit will grow to 4 trillion roubles. He said Russia's Reserve Fund could be spent within 18 months. He expressed fears that Russia might not have enough resources to meet budget obligations in 2016 and even in 2017. At the current exchange rate, 4 trillion roubles is more or less equivalent to $71 billion, an amount not that far from the $89 billion the Reserve Fund currently holds.

The U.S. and EU sanctions imposed on Russia because of Moscow's intervention in the Ukraine crisis have worsened the country's problems as foreign investment declined sharply. About $100 billion worth of investments was lost as Russian banks and companies have lost access to global markets.

Government spending will have to be cut 10 percent in 2015, but Finance Minister Anton Siluanov said it was not enough to balance the budget. He revealed that expenditure was mostly on social and defence contracts. Mr Putin had reportedly ordered to put military investment as the top priority even before Western sanctions were in place.

Meanwhile, Russia continues to reach out to its allies amid increasing isolation. Russian Deputy Foreign Minister Igor Morgulov told Xinhua that there is an "enhanced" mutual understanding between China and Russia as both presidents already met five times in 2014. Morgulov said that he was not exaggerating when he said that the two countries have taken a landmark step in terms of energy cooperation. Agreements concerning the financial, space, technology and aircraft manufacturing sectors were also accelerated in 2014.

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