With oil at $25 the Russian budget will lose about 20% of the income

Moscow. January 22. Russia to hold in 2016 the budget deficit at 3% of the GDP with oil prices at $25 per barrel, it would be necessary to reduce budget expenditures by 3.4 trillion rubles, according to experts of the Center of the Higher school of Economics.

If the average annual oil price of $40 and the dollar exchange rate of 70.6 per ruble, volume of shortfall in income will be around 1 trillion roubles at an oil price of $25 and the course 83,4 of the ruble, the budget will lose more than 3.4 trillion rubles, according to a monthly review of the Centre.

“Given the already inherent in the original budget deficit of 3% of GDP to cover the amount of such shortfall in income from the contingency Fund, a new 10% unsecured sequestration costs and built into the expenditure side of the budget, “presidential” of the reserves is unrealistic. Maintaining the current situation even within one year requires radical solutions for balancing the budget in the medium term, no later than the beginning of next year, better this year”, – experts say.

The volume of Federal budget revenue is planned in 2016 $ 13,738 trillion (17.5 percent of GDP), expenditure – 16,099 trillion rubles (20.5% of GDP).

According to experts, the government will not itself attempt to reduce all, without exception, the budgetary expenditures by 20% or to put such task for ministries. It is more likely that there will be prepared proposals for some cost reductions by increasing the budget deficit.

If you do not revise the budget when oil price of $40 the Federal budget deficit will amount to 4.5% of GDP, with $25 per barrel is 7.6% of GDP, says the review.

Under scenario with oil price $40 the budget deficit in 2016 could be financed from the Reserve Fund, even if the volumes of domestic and external borrowings will remain at the levels set forth in the budget for 2016, but in this case 90% of the total Fund by the end of the year will be spent.