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One of Russia's biggest economic problems is summed up in this chart

Sep 15, 2016, 13:18 IST

File photo of pump jacks at Lukoil company owned Imilorskoye oil field outside West Siberian city of KogalymThomson Reuters

Low oil prices are hurting Russia badly.

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The country's budget is partly dependent on oil revenues and, with oil prices down more than 60% from 2014 highs above $100 a barrel, Russia has been dipping into its emergency fund.

But there is not a lot left. In fact, Russia is running out of money.

Last week, Russia's finance ministry revealed that the fund designed to cover shortfalls in the country's national budget shrunk to £23 billion ($30.6 billion), from £67 billion in 2014.

According to a report by the International Institute of Finance, Russia's budget was a little too optimistic about the average price of oil in 2016.

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Here is the IIF (emphasis ours):

"The federal budget was based on a $50/barrel price of oil, while the average price in January-August has been only $42.70.

"The budget also implausibly assumed a 1% real GDP growth this year, while the economy has been in recession. The impact of lower oil prices was especially painful. Export duties on oil fell to 1.1% of GDP in January-July, from almost 2% last year and 4% of GDP in 2011."

Here is the chart from the IIF:

IIF

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And this is oil's fall. Prices have dropped from over $100 per barrel highs in June 2014, to around $46 per barrel. At one point this year, the oil price was flirting with the $20 per barrel mark:

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The IIF said that the economic damage caused by sanctions and cheap oil amounts to a "lost decade," and the country needs real change to kickstart growth.

Here is the IIF again:

"With real GDP growth averaging only 0.3% since 2008 when oil process peaked at $130/barrel, the Russian economy has already experienced a lost decade. It needs to implement radical changes if it is not to repeat weak performance in years to come."

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