Russia’s federal budget for 2016 relies on an average annual oil price of $50, which almost corresponds to the last year average price – $51.4 per barrel.
According to business daily Vedomosti, Russia’s First Deputy Prime Minister Igor Shuvalov has instructed the ministries to work on different scenarios, both bearish and bullish.
The most recent collapse in energy prices from November means the Russian budget will lose 300 billion rubles (about $4 billion) in oil revenue in the first two months of 2016, according to the newspaper’s ministerial source.
The updated macroeconomic forecast will be presented by Economic Development Minister Aleksey Ulyukaev later this month. In the meantime, the government has decided to cut spending by 10 percent.
The current Central Bank shock scenario assumes oil prices of $35 per barrel as well as projected 2-3 percent GDP contraction and seven percent inflation. But the country’s leading bank Sberbank has already begun to make a $25 stress test.
“We had a $30 scenario. But now it’s irrelevant. In our business plan, it was the worst-case scenario, which became real at the beginning of the year,” Sberbank CEO Herman Gref told the Interfax news agency.
READ MORE: Crude price swings and Russian economy in 2016
Some analysts say there’s a certain way to cut expenses – to cut military costs.“The country in such a position cannot spend four percent of GDP on defense,” said economist Vladimir Nazarov.
Article source: https://www.rt.com/business/328728-russia-oil-prices-budget/?utm_source=rss&utm_medium=rss&utm_campaign=RSS
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