In view of the sharp rise in cut-off oil prices for the Stabilization Fund from $20 to $27 per barrel in the 2006 draft budget, Western investors wanted to know about the principles for forming the Stabilization Fund. Kudrin said the cut-off price would not exceed $27 per barrel.
The minister's statement was published in a news release on the Finance Ministry's Web site.
The Stabilization Fund was established on January 1, 2005. It receives taxes from oil exports when the price exceeds $20 per barrel. As of early June, the Stabilization Fund had accrued 954.5 billion rubles ($33.4 billion). By the end of the year, the figure will reach 1.2 trillion rubles ($41.99 billion), and 2.3 trillion rubles ($80.48 billion) by the end of 2008, according to the Economic Development and Finance ministries.
Earlier, the government considered using Stabilization Fund money for financing ambitious infrastructure projects. However, Kudrin insisted that the Stabilization Fund could only be used for repaying the debt to the Paris Club of Creditor Nations and for covering the Pension Fund deficit.
According to the president's budget address, the Stabilization Fund will be used only for settling Russia's external debt.
The government made a compromise decision to raise the cut-off price for oil export duties to $27 per barrel. The funds yielded will be spent on social needs (raising wages and pensions) and financing infrastructure projects (new roads, airports and ports).
