(Reuters) – Russia’s government has pushed the country into an economic crisis by not tackling its financial problems fast enough, former finance minister Alexei Kudrin said on Monday, warning the full effects would be felt next year.
Kudrin — a darling of investors who is credited with building Russia’s $170 billion worth of sovereign wealth funds — added that sanctions over Ukraine, not falling oil prices, were primarily behind the collapse of the rouble and warned that Russia risked seeing its debt downgraded to junk status in 2015.
“Today, I can say that we have entered or are entering a real, full-fledged economic crisis. Next year we will feel it clearly,” the former minister told a news conference.
“The government has not been quick enough to address the situation … I am yet to hear … its clear assessment of the current situation.”
Kudrin, one of few to criticize President Vladimir Putin, quit in 2011 in protest at proposals to increase defense spending.
He has since criticized Putin’s response to Western sanctions imposed following Russia’s annexation of Ukraine’s Crimea region and its subsequent support for loyalist fighters. But the two men are still believed to be close.
Russia has been hit by what Economy Minister Alexei Ulyukayev called a “perfect storm” of plummeting oil prices, sanctions and a flight of investors’ capital, made worse by a lack of structural reforms that means the economy is overwhelmingly dependent on oil revenues.
Government officials have tried to minimize the impact of sanctions on the country and its rouble currency — which plunged last week despite a hike in interest rates to 17 percent. Putin has claimed “external factors” like oil were the key culprit behind the country’s “tough times”.
But on Monday Russia announced plans to impose a heavy tax on grain exports since rouble volatility and high global prices have caused exports to spike. Russian news agencies reported Prime Minister Dmitry Medvedev told a meeting with officials that the country needed to hang on to its stocks.
And though the country’s top oil firm Rosneft said it had made a $7 billion debt repayment from its own cash reserves, easing some investors’ worries. Russia’s central bank said it would have to bail out mid-sized Trust Bank with 30 billion rubles ($544.54 million) to stop it going bankrupt.