The global economy has ‘serious problem’ due to the reckless U.S. borrowing told Russian President Vladimir Putin while at the same time defending Greece as the victim of the debt crisis.
“It’s a serious problem not just for the United States but for the whole world economy,” explained the Russian President on Friday in Ufa answering a question on the outlook of the major developing countries. “Debt exceeds gross domestic product there.”
Putin expressed his concern over Greece and is optimistic about its future. Furthermore the Russian President has repeated that the Greek Prime Minister Alexis Tsipras hasn’t asked him for financial aid. Nevertheless, Russia is able to aid its allies, said Putin.
Regardless Putin’s boast about the capabilities of Russia, the record low oil prices and the sanctions over Ukraine are taking their toll on the Russian economy: after six years of growth the economy is in recession. Russia’s strongman is depicting not the first time the U.S. economic policy as the harbinger to global economic prospect: previously attacked the Americans for using their global dollar hegemony to “leech” on the global economy.
The Russian ruble has dropped 40 percent versus the dollar in the last year, only the Ukrainian hryvnia lost more from its value. Central Bank of Russia began buying foreign assets in May worth $100 million to $200 million per day in order to fill up the fund.
According to the International Monetary Fund forecast, the U.S. ration of government debt to GDP will fall from 105 to 104 percent in 2018.
“We know what’s at stake”
Russia’s foreign reserves were $359.6 billion on July 3. That is about $100 billion less as in July 2014, according to tradingeconomics website. The ever denied Russian incursion to Ukraine and the plummeting oil prices drained the Russian foreign exchange reserves. Still, Putin assured its partners to assist them in emergency.
“Russia, of course, is able to offer help to its partners regardless of today’s difficulties with the economy,” retorted he after a meeting of the Shanghai Cooperation Organization. “We’re helping some countries.”
Russia and Greece enjoys special relationship that is based on common religious ground, said Putin, both countries are Orthodox Christian. Athens is unable to depreciate currency in order to restart its economy since it is part of the euro zone, explained Putin.
“Greece is a European Union country and within its obligations is conducting rather difficult negotiations with its partners,” he said. “Mr. Tsipras hasn’t approached us regarding aid. And that’s generally understandable because the numbers are big and we know what’s at stake.”