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Russia’s Economy Minister Anton Siluanov said that the country’s Reserve Fund could be maintained this year at international oil price levels of US$50 a barrel. The Reserve Fund is fed with oil and gas revenues that remain after the bulk is transferred into the federal budget to fund various programs.
Speaking to media on the sidelines of an economic forum, Siluanov explained that this would be possible thanks to the fact that the additional oil and gas revenues that the budget will receive if oil stays at US$50 could reach US$17 billion (1 trillion rubles) this year.
The Minister added that planned outlays for this year from the Reserve Fund and the Fund of National Wealth together are calculated at US$30 billion (1.8 trillion rubles). The size of the Reserve Fund as of end-2016 was US$16.36 billion (972.13 billion rubles), down 73.3 percent on 2015. Last year, US$40 billion (2.137 trillion rubles) from the Reserve Fund was used to cover the deficit brought about mostly by the oil price crash.
Related: Saudis Cut Even More: Oil Production Falls To 2 Year Low
The size of the Reserve Fund and the Fund of National Wealth is calculated as a portion of gross domestic product for each fiscal year. When the Reserve Fund is filled, what remains of oil and gas revenues goes into the Fund of National Wealth. At end-December 2016, the Fund of National Wealth totaled US$70 billion (4.36 trillion rubles).
Siluanov also said that the Reserve Fund will likely remain untouched until the end of the first quarter of this year. According to new portal RIA Novosti, since the 2017 federal budget is based on international oil prices of US$40 a barrel, what remains in the Reserve Fund right now could be spent in total after March-April and the Fund of National Wealth will be tapped. However, if prices remain at US$50 and higher, there is a chance that the Reserve Fund’s size to be kept at current levels.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.