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Finance Minister: Russia Adapted To Lower-for-Longer Oil Prices

Refinery

This year Russia’s budget is reaching its highest level of resistance to oil price swings in the past nine years, Russian Finance Minister Anton Siluanov told Parliament on Friday.

We see that the so-called non-oil and gas budget deficit is going down, which demonstrates the resistance of the budget to various fluctuations related to international environment, Siluanov said, as quoted by Russia’s TASS news agency.

The share of the non-oil and gas deficit is expected to fall by 0.6 percentage points to stand at 8.4 percent of GDP, the lowest in nine years, the minister said.

The share of oil and gas revenues in 2017, on the other hand, is expected slightly down from previous years, at around 40 percent of all federal budget revenues, according to Siluanov.

While the non-oil deficit is expected down, the value of the Russian ruble is up 11 percent year-on-year, RT quoted Siluanov as saying.

Total fiscal deficit this year is now expected to account for 2.1 percent of GDP in 2017, compared to an original forecast for a 3.2-percent share, according to Russia’s finance minister.

In order to protect the budget from external risks, Russia needs to continue sticking to a conservative oil price forecast of US$40 per barrel, Siluanov said, as posted in a tweet by the finance ministry.

Last week, Russia’s Economy Minister Maxim Oreshkin said that the current underlying key assumption of Russia’s economic policies—oil prices at US$40—can allow it to live forever at that price or below. From a Russian economy perspective, the key assumption on which all Russian monetary and fiscal policies are based is oil at US$40, Oreshkin said. Russia is not as dependent on the price of oil as it was five or ten years ago, Oreshkin noted, and said:

“We are actually ready to live forever at oil prices $40 or below.”

By Tsvetana Paraskova for Oilprice.com

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  • Kr55 on June 09 2017 said:
    I'm sure people in Russia love paying >2 times as much for any non-Russian made products then they did a few years ago.

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