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Russia Needs to Readjust Budget for Next Years to Reflect Lower Oil Prices

© Sputnik / Aleksandr Astafiev / Go to the mediabankThe ongoing oil prices drop and the country's slow economic growth push Russia to seriously overhaul its federal budget, Finance Minister Anton Siluanov acknowledged.
The ongoing oil prices drop and the country's slow economic growth push Russia to seriously overhaul its federal budget, Finance Minister Anton Siluanov acknowledged. - Sputnik International
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The ongoing oil prices drop and the country's slow economic growth push Russia to seriously overhaul its federal budget, Finance Minister Anton Siluanov acknowledged. He warned the budget may lose $21.5 Billion in 2015.

MOSCOW, November 26 (Sputnik) — Russia will need to readjust its federal budget for the next few years to reflect oil prices of $80 to $90 per barrel, Russian Finance Minister Anton Siluanov said Wednesday.

The Russian economy is losing $40 billion in a year because of western sanctions and another $90-$100 billion because of a 30-percent drop in oil prices, Russian Finance Minister Anton Siluanov said Monday. - Sputnik International
Russia Losing $40Bln in Year Over Sanctions, $100Bln From Oil Prices Drop
“Our budget and economic plans need to be configured based on new macroeconomic events, which in our view won’t change soon. The new price for oil of $80-90 [per barrel] will most likely remain for the long haul,” Siluanov said during a Federation Council session. "Therefore, when planning the budget for the new budget cycles, we need to base it on the oil price forecast that we expect."

"We, of course, have risks for the next year, and first of all this is the price for oil. If this situation continues with the ruble's exchange rate and oil prices like today, then we will lose around 500 billion rubles [$10.7 billion] in revenue," Siluanov stated.

The minister has also pointed out that Russia's budget is at risk "in the slowing of economic growth," those risks may account for another $10.7 billion in losses.

The Duma, Russia's lower house of parliament, has approved a draft budget for the years 2015-2017 in its third reading. The bill now needs approval from the Russian Senate and the president. - Sputnik International
Russia
Russian Duma Approves 2015 Budget, No Social Spending Cuts Projected
In early October, Central Bank first deputy chair Ksenia Yudayeva said the Russian financial regulator was working on a shock scenario for financial policy in the case of a plunge in oil prices. There were three options in the scenario, with the toughest of them suggesting an action plan should prices fall to $60 per barrel.

Nevertheless, this idea was dumped, as the Russian Central Bank did not believe the oil prices could fall below $80 per barrel up to 2017.

In recent months Russia's economy has been exhibiting signs of a minor slowdown due to geopolitical tensions and a drop in oil prices, which was caused by an excess of oil supply by OPEC.

The Russian Economic Development Ministry does not agree with the country’s Finance Ministry’s assessment that Russia is losing $40 billion annually because of sanctions imposed by the West, Economic Development Minister Alexei Ulyukayev said Monday. - Sputnik International
Economic Development Minister Disagrees Russia Losing $40Bln Over Sanctions
Russian Economic Development Minister Alexei Ulyukayev said, however, that he does not believe in such a dramatic price decline. The Russian Finance Ministry said that it expects global oil prices to stabilize at $90 per barrel in the medium-term, although there could be a short-term fall in 2015.

 

 

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