MOSCOW: Russia’s budget deficit may amount to 2% of GDP in 2017, which is below forecast, Finance Minister Anton Siluanov said Monday. “(Russia’s 2017 budget deficit in amendments to the budget law – TASS) will go down by 1 percentage point. It will amount to around 2% (of GDP),” he said.
Russia’s Finance Ministry does not rule out an increase in this year’s budget expenditures above target. “There will be a number of decisions on certain areas (to raise 2017 budget expenditures – TASS). We’ll have to increase expenditures (submit amendments to the budget law to the State Duma’s spring session – TASS),” Siluanov said. Revenues of the three-year federal budget are expected at 13.4 trillion rubles, expenditures – at 16.2 trillion rubles in 2017. The three-year budget is based on average oil price of $40 per barrel and inflation not higher than 4%. Siluanov also said the new budget rule (mechanism of Russia’s budget formation, determines the maximum level of spending on the basis of oil prices – TASS) may become effective starting 2019. “We have the budget ready till 2020. In fact, the budget rule is effective now. (We have to agree the new budget rule – TASS) so that it will be enacted, to start using it in 2019 or 2020,” he said.
According to Siluanov, the new budget rule should imply the cut-off price at $40 per barrel and adjust it for U.S. inflation. The budget rule is aimed at reducing dependence of Russia’s budget on market revenues. The essence of the rule is to transfer additional oil and gas revenues, which are formed if the actual price of oil exceeds the target price, to the Reserve Fund. This mechanism was suspended in 2015 due to plunging oil prices.
