Prime Minister Vladimir Putin said Monday that Russia was well prepared to ride out the financial crisis that has caused turmoil on its stock markets.

Prime Minister Vladimir Putin said Monday that Russia was well prepared to ride out the financial crisis that has caused turmoil on its stock markets, but may dip into a "rainy-day" fund to offset falling oil prices.
"We will not allow (the crisis) to catch us off guard," he told a meeting of foreign investors and government officials. "We have taken into account potential threats when building our financial and economic policies."Putin's comments came as Russian stocks enjoyed some respite Monday, rising for the first time in three days on the back of global gains and speculation that the government will soon start buying domestic stocks to support local markets.MICEX, where most trading takes places, added 4.5 percent to 626.4 points, while the RTS closed up 4.9 percent to 700.4 points.Russia's stock markets _ which have shed two-thirds of their value since their May peaks _ have been among the hardest hit globally this year, thanks in part to falling oil prices, Russia's invasion of Georgia this August, and a slew of concerns over government interference in business. The biggest falls were triggered in September with the collapse of U.S. investment bank Lehman Brothers and many investors in Russia were subsequently forced to dump stock to meet margin calls.
The country's leadership has been quick to blame the United States for the problems on the domestic market.The stock market problems and falling commodity prices are feeding into the real economy. Banks have slashed lending or upped their interest rates, leading to widespread job and production cuts as companies struggle to refinance or pay off their debts.Still, Russia is sitting on the world's third-largest foreign currency reserves, and has amassed a war chest from windfall oil profits of some US$190 billion, the majority of which is stashed away in a reserve fund. Money from the reserve fund is invested in low-risk government bonds, and is intended to safeguard against a substantial fiscal gap in the budget.Andrei Illarionov, a former Kremlin adviser and now a government critic, said Monday that Russia cannot blame its economic difficulties on either the U.S. or the falling oil price."The problems in Russia's economy have their origin within the borders of our country, at least to a great degree," he said. "These are most of all problems of our own making."Putin, who as president oversaw an eight-year economic boom, argued the country was relatively insulated from the economic shocks anticipated in the West, saying that Russia could buoy its economy through internal resources. The government has already outlined ambitious spending projects over the next few years, designed to build and overhaul existing infrastructure, and boost defense and social spending."Our economy is well prepared for a lengthy external shock," said Putin. "The setting aside of some oil profits in the budget means that the reserve fund will offset the decline in oil prices. The 2009 budget will be balanced even if oil averages at US$70 a barrel."Urals oil crude dropped last week below US$70 a barrel _ the level assumed by the budget. Any fall below that figure puts pressure on Russia's budget surplus, prompting speculation from analysts that the government would rein back spending on ambitious infrastructure and social programs.
But Putin ruled out any plans to reduce expenditure, and said the Kremlin could instead use its massive reserve fund to tap any shortfall.