HANOI, may 22. /TASS/. The Ministry of economic development will revise some indicators of the macroeconomic forecast for 2017 in case of positive decision on the extension of the agreement to reduce oil production, including the inflation projections for the year-end exchange rate and the budget deficit. About it has informed journalists the Minister of economic development of Russia Maxim Oreshkin.
OPEC, Russia and a number of other independent producers will be discussed at a meeting in Vienna, may 25 the question of the extension of the agreement to reduce oil production for another nine months. According to the Minister of energy of Saudi Arabia Khalid al-Faleh, all the participants of the current transaction already pre-agreed to continue to limit production until March 2018. Previously, he also said that discussing the extension with the current quota reduction of 1.8 million barrels from October 2016.
The Saudi Minister and Minister of energy of the Russian Federation Alexander Novak has repeatedly stated that the renewal of the current agreements are necessary to reduce the global oil reserves to the average for the five years levels. The new agreement will allow us to achieve this goal by the end of 2017, said the Ministers.
“To predict it (the continuation of the agreement – approx. TASS) will mean a higher average annual price of oil. In this section we go a little above the forecast that we have. Accordingly, in General, slightly stronger ruble in the framework of the evaluations mentioned previously, respectively – higher probability that inflation would deviate downward from the baseline forecast, which is now 3.8 per cent,” said Oreshkin.
The Minister of economic development of the Russian Federation recalled that the macroeconomic forecast will be revised in June, while drastic changes in the indices will not.
The ruble stronger, the deficit is less
The reduction of inflation below the target level of 4%, in turn, will push the Central Bank of the Russian Federation to a more aggressive reduction of the key rate, says Oreshkin. “Yes, it is, of course, will open more opportunities, and more pressure on the Central Bank to the downside rates will be,” said he, answering the question of whether you will have a more aggressive Central Bank to lower the rate in case of prolongation of the agreement on production cuts and lower inflation forecast of 3.8%.
As for the exchange rate at the end of 2017, Minister of economic development, the more likely it will reach 62-63 rubles per dollar in the case that an agreement to reduce oil production will be extended. “We had two charts of the forecast – baseline with the decline in oil prices to $40 by year-end, inflation is 3.8% and the weakening of the ruble to 68 rubles to the dollar by year-end. There was a variant with inflation at 2.9%. Accordingly, if we follow the higher of oil, the rouble is accordingly not 68 rubles, and maybe 62-63 of the ruble at current oil prices – we’re coming closer to these values,” he said.
According to him, the budget deficit in 2017 if the extension of the agreement of OPEC are expected to fall below 2% of GDP due to higher oil prices. “The budget deficit may be below 2% to be. Oil goes higher, and revenues from oil and gas will be higher”, – said Oreshkin.
On 18 may, the Russian government has approved the Ministry of Finance proposed amendments to the budget in 2017, which assume higher revenues and a lower budget deficit due to the increase in oil prices above the expected level of $40 per barrel of Urals.
According to the Minister of Finance Anton Siluanov, the Ministry of Finance laid the budget amendment adjustments in the price of oil from $40 to 45.6 per barrel Urals. As a result of such revaluation are incorporated in the budget 2017 projected inflation lowered to 3.8% from 4%, the planned deficit of the Federal budget is proposed to decrease by 30.1% to 1,924 trillion with 2,753 trillion (or 3.2% to 2.1% of GDP) and the projected size of Russia’s GDP in 2017 to increase by 6.2% to 92,19 trillion with 86,806 trillion rubles.