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. Last Updated: 07/27/2016

IMF: Good Policy Protects Russia From Oil Drop

Russia is safe from recession and can repay all its foreign debts in 2002 without the need for financial aid, even if prices for oil fall more substantially, the IMF's resident representative in Moscow said Thursday.

Russia has enjoyed two years of boom due to high world prices for its commodity exports, particularly oil. Gross domestic product rose 8.3 percent last year, a post-Soviet record, and is set to grow 5.5 percent this year.

The International Monetary Fund's Poul Thomsen said in an interview that Russia would be protected by the fact that it had pursued sound economic policies.

"The current stance of fiscal, monetary and exchange rate policies would remain broadly appropriate even if there was a further small decline in oil prices in 2002 from current levels," he said.

"In fact, even if there was a more substantial drop in oil prices, the authorities could cope without needing financial support from the IMF, although there would have to be some adjustments to economic policies," he added.

"The important conclusion is that the starting position of Russia is quite favorable. Russia is in a position where it should be able to manage a less favorable external environment very well."

An IMF mission recently finished a visit to Moscow to assess economic policies.

Thomsen declined to say exactly what would count as a more substantial drop in oil prices. However, he said much of what would be required if oil prices slid had already been agreed to with the State Duma, which was why the fund was confident about Russia.

He said a more fundamental and long-term drop in oil prices would have more impact, but saw such an outcome as unlikely given what was currently known about world markets.

Thomsen also said Russia should be able to make its foreign debt repayments on schedule.

"Can they do it without exceptional balance of payments support from the fund or the Paris Club? Yes, they can," Thomsen said, speaking of the ability to repay loans.

Russia has built up foreign and gold reserves to more than $30 billion. Its balance of payments is helped by a large trade surplus of more than $40 billion. The IMF has in the past bailed out Russia, but Russia this year decided not to sign up to any loan programs.

Thomsen said he was confident that the reforms launched by President Vladimir Putin would continue.

"From what we have heard from the government as far as 2002 is concerned, they intend to keep moving across a broad range of reforms," he said.