The Finance Ministry proposes to change the fiscal rule to windfall allocated to the Reserve Fund, was considered as the means received from export of oil when prices rise above $40 per barrel. This was announced by the head of Department Anton Siluanov in Moscow financial forum on Friday, peredach correspondent .
“Now the average price is one that more or less balances the current state of the oil market. So, all the surplus should go to the reserves,” said Siluanov.
The Minister stressed that the purpose of removing windfall profits is not only the completion of a “safety cushion”, but also to curb the excessive growth of the ruble exchange rate that hurts the competitiveness of Russian goods.
“They [windfall] must not affect the course which for several years stood in nominal terms, despite the rising inflation, it has appreciated in real terms,” — said Siluanov.
The Finance Minister also noted that previously accumulated “safety cushion” will last for another three years, but only under the condition of careful spending. “The budget is prepared in such a way that we will reduce the imbalance which has occurred as a result of lower part of oil revenues by a third. It is not a shock. Only thanks to the reserves that were created when the Minister of Finance Alexei Leonidovich [Kudrin], we were able to go three years and we have enough of them for about three years,” — said Siluanov
Earlier, Deputy Finance Minister Alexei Lavrov warned that in 2017, the Reserve Fund will be completely exhausted if the rate of spending from it will remain at its current level (only in August of 2016 from the Reserve Fund to cover the deficit of the budget was spent 390 billion rubles).
The fiscal rule was introduced in Russia in 2013. According to him, all oil revenues received in excess of the price of oil average over the previous several years should be directed to the Reserve Fund, not to increase public spending. In 2015, the rule stopped working since the world prices of oil fell below the government calculated the average level of $96 per barrel.
In April 2016, Siluanov said that his Ministry has developed a new version of the budget rules, under which the Reserve Fund shall be withdrawn funds in the budget in excess of the price of oil at $50 per barrel. The Minister of Finance then said that this order “will not allow the ruble appreciation and the negative impact of changes in oil prices on the Outlook for growth, inflation, interest rates, etc.”
In the last month, the international price of Brent crude oil only twice rose slightly above $50 per barrel. The cost of a barrel of Russian Urals oil was last climbed above $50 in July 2015 and in early 2016 she declined to nearly $25.