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    MOSCOW, January 1, 2004. /RIA Novosti correspondent/. From January 1, 2004 Russia will start setting up its first ever stabilisation fund.

    The fund is designed to become a mechanism of protection for the budget against unfavourable external economic conditions.

    As was repeatedly stated by Deputy Prime Minister and Finance Minister Alexei Kudrin, thanks to the establishment of the fund "Russia has for ever escaped the possibility of a default".

    According to him, the establishment of the fund "will substantially reduce all risks in relation to the Russian economy, in relation to non-predictable exchange rates of currencies and in relation to non-payment of debts".

    The fund will comprise financial reserves and the balance of budget assets available by the beginning of the financial year.

    Later on, it will include additional revenues obtained when the oil price is over and above the benchmark value, fixed at 20 dollars per barrel.

    For the end of the year the volume of the fund set in the federal budget is 83.4 billion roubles (more than 2 billion euros).

    "In 2004, we may expect higher oil prices," Kudrin said. "This will enable us to accelerate economic growth and to accumulate the stabilisation fund more quickly." With a crude price of 22.5 dollars per barrel in 2005, and 23 dollars per barrel in 2006, the fund's volume, according to Kudrin's forecast, may reach 500 billion roubles by the end of 2006. "This is the 'cushion' that is needed to protect the budget and all its social programmes," the vice-premier noted.

    Should this volume be surpassed, Kudrin concedes that fund money can be used for other purposes, above all to repay sovereign debt and to replace borrowings.

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