Russia prepares new economic forecast under harsh situation

The Russian government is preparing a new socioeconomic forecast under the current "extremely severe" circumstances characterized by continued slump in oil prices in international markets, a senior official said Friday.

"The new forecast is being prepared by the Ministry of Economic Development, and will be delivered to the government in two days," First Deputy Prime Minister Igor Shuvalov told a session of State Duma, the Parliament's lower house.

He said the government does not have "rainbow expectations and illusions" when oil prices keep falling, adding that the domestic and world economy contraction is another disturbing factor for Russia's economic growth.

Shuvalov admitted that last year's introduction of a free-floating ruble exchange rate is "highly painful", as it has resulted in a sky-high interest rate which makes credits unaffordable for business. He insisted, however, the move is correct and justified as the government has tried to dilute panic among the people.

Speaking of the downgrading of Russia's rating by international rating agencies, he said the moves are completely out of political reasons and they are trying to coerce Russian business into influencing government policies.

Various international rating agencies have recently downgraded Russia's economic ratings, citing ruble's weakness and the ailing economy. Endi