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Midyear hikes in utility prices may cause shock – financial ombudsman

January 21, 2012, 1:37 UTC+3

“I believe that our banking system is like The Costa Concordia,” the financial ombudsman said

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MOSCOW, January 21 (Itar-Tass) —— For the Russian economy in 2012 there exist certain potential risks in connection with “a second wave” of the world crisis and with the rise in the prices of utility services scheduled for the middle of the year, which may have a shocking effect on the population, Russia’s financial ombudsman, former State Duma member Pavel Medvedev told a news conference on Friday.

Asked about the possibility of a crisis in Russia this year, Medvedev used a graphic comparison. He recalled two recent shipwrecks – the Costa Concordia and the Bulgaria. Although The Costa Concordia was in a good technical condition, he said, and The Bulgaria, in a bad one, the effect was the same. Both ships sank.

“I believe that our banking system is like The Costa Concordia,” the financial ombudsman said. “I am not saying that it is heading for a reef. I believe that it has very good chances of not sinking. But what it needs is a good captain and no storm.”

Medvedev suspects that in the second half of the year there may be not a storm, but rough seas. He pointed to the “rather high political tension” in society. In the middle of the year the tariffs are to go up, and that will be a noticeable shock.

He fears that this will “coincide or nearly coincide with a global storm.”

“The outlook for China is bad – 5-6 percent growth instead of 9-11 percent.” Besides, there is the fear that Europe will see a slump, and growth in the United States will be meager. This means that the consumption of goods and raw materials will shrink. Oil prices may fall at a time when “our budget can hardly make ends meet.”

“We need 110 dollars per barrel,” the financial ombudsman said.

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