Facing Western sanctions and low oil prices, Russian companies are lining up for subsidies from the government. But the demand for bailouts is quickly outstripping the supply of money, raising the prospect of an economic crisis here if the funds run out, the International Herald Tribune reported. With the economy flailing, the Russian government set up a corporate bailout program last year, tapping one of the country’s sovereign wealth funds. Almost immediately, companies started applying. The state-owned oil giant Rosneft has requested $21.3 billion.

Russia’s inflation rate has accelerated to levels last seen in 2002, leaving the central bank with a policy conundrum as the economy slides into a recession, The Wall Street Journal reported. Hit by a rapid drop in the price of oil, Russia’s chief export, the country faces an economic and financial crisis similar to the one endured in 2009. But unlike six years ago, the country has been cut off from global capital markets because of Western sanctions imposed after Moscow’s annexation of Ukraine’s Crimean peninsula.

Russia sharply raised the amount it plans to draw from its reserve fund to support this year’s budget, as revenues fall along with oil prices and Western sanctions cut the country off from international financing, The Wall Street Journal reported. In addition to tapping the fund—money the government put aside in the years when oil prices were high—spending by ministries and departments will be cut 10% to keep the deficit from growing too much, Finance Minister Anton Siluanov said Friday.

Petropavlovsk PLC suffered a blow Tuesday when an investment vehicle representing a sizable number of the Russia-focused gold miner’s shareholders said it would vote against the company’s financing package, which is aimed at staving off the threat of bankruptcy, The Wall Street Journal reported. Sapinda Holdings B.V. told the U.K.-listed miner that shareholders representing 10.7% of Petropavlovsk’s equity intend to vote against the company’s restructuring proposal after concluding that it unfairly favors bondholders over shareholders.

Elvira S. Nabiullina, the governor of Russia’s central bank, was deep into a speech about her new currency policy when it became clear nobody was paying attention. Her audience, chief Russia economists from a dozen or so foreign banks, were looking down at their laps to nervously check their smartphones. The ruble, which had been slowly slipping after a predawn interest rate increase by the central bank, had just plunged 19 percent.

The co-founder of Russian-owned broker Alpari applied a year ago to wind up the parent company of its retail FX brokerage Alpari UK, fearing long before the company's collapse from trading losses last week that it "was doomed". Andrey Dashin, whose website lists him as "the Chairman of the Board of Directors and co-owner of the Alpari brand", said he lodged a winding-up petition for Alpari UK parent company Alpari Group Limited with a Cypriot court on Jan. 28, 2014.

Russia’s economy will shrink by close to 5 per cent this year, the European Bank for Reconstruction and Development forecast, while average growth for eastern Europe and the former Soviet Union will fall into negative territory for the first time since 2009, the Financial Times reported. The development bank for the former Communist bloc said plunging oil prices and western sanctions would lead to a contraction in the Russia’s economy of 4.8 per cent this year, compared with a forecast drop of 0.2 per cent in September.

The Russian central bank’s net currency interventions in 2014 amounted to $76.13 billion and €5.41 billion, Interfax news agency reported on Monday, citing central bank data, the Irish Times reported. Interventions in the month of December amounted to $11.9 billion. The bank intervened heavily last year as the rouble slumped because of international tensions over the Ukraine crisis and plummeting prices for oil, Russia’s main export. The Russian rouble opened more than 2 per cent lower against the dollar on Monday, dragged down by flagging oil prices.

Russia has moved to support a number of large companies and banks as it tries to prop up a struggling economy and a banking sector battered by the rouble’s jitters, the Financial Times reported. On Wednesday, the government said it would support Yamal LNG, the Arctic gas project of Novatek, with Rbs150bn. Separately Gazprombank, the country’s third-largest lender, said the government had bought Rbs39.95bn in preferred shares, using money from a subordinated deposit the bank had returned to the National Wealth Fund.

Russia’s economy contracted for the first time in more than five years in November, taking a step toward a full-scale recession next year, data from the economy ministry showed Monday, The Wall Street Journal reported. After an optimistic start to the year, when Russia hosted the Winter Olympic Games and enjoyed high oil prices, the world’s largest country by area later stumbled over Western sanctions, massive capital outflows and a sudden drop in oil prices. Now the economy is widely seen contracting next year for the first time since the global financial crisis.