Nightmare day for Russia on the financial markets. Oil in free fall below 30 dollars a barrel causes the ruble and the Moscow Stock Exchange to collapse. In the middle of the day, the RTS index in dollars of the main Moscow stock index fell by 4,8% while the Micex, in rubles, dropped by 3,2%. Prime Minister Dmitri Medvedev who signals, with crude oil at these levels, there are "serious risks" for the state budget.
Concerns about the prospects of the Russian economy caused the ruble to slip to its lowest since December 2014 with the exchange rate against the dollar at 77,54 (after having touched 77,72) and against the euro at 84,60.
"The dramatic movements in the price of oil, as we have seen in recent weeks and especially in recent days, create very serious risks for the implementation of the budget," Medvedev said during a cabinet meeting, according to reports from Russian agencies.
The Russian government is working on a plan to cut spending and the Premier reiterated to ministers his intention to reduce unnecessary expenditure in order to meet social obligations and finance expenditure such as defense.
According to the Russian press, and in particular Vedomosti, the Executive is preparing to revise the estimates of GDP for the current year, forecasting a contraction of the economy in the order of 0,8%, compared to the estimated +0,7% until this moment.
