REUTERS
The Reserve Fund of the Russian Federation may be virtually wiped out in 2015-2016 due to the recent collapse in oil prices, the economic recession and restrictions on access to foreign financial markets, according to the data from the country’s Finance Ministry quoted by Russian newspaper Vedomosti.
Around RUB 3.7 trillion may be taken from the Reserve Fund in 2015, and RUB 1.2 trillion more in 2016. Thus, according to Finance Ministry estimates, by early 2017 the Reserve Fund will have RUB 500 billion, which accounts for about 3% of annual revenues in 2017.
Earlier, Russian First Deputy Finance Minister Tatyana Nesterenko said that the Finance Ministry would ask the State Duma to allocate it RUB 2.7 trillion in 2015 in addition to the RUB 500 billion already authorized. Accordingly, the total expenditure of the Reserve Fund in the current year could reach RUB 3.2 trillion rubles, she said.
Funds from reserves are required to finance the "double deficits" of the budget: the shortfall (in comparison with previous plans) of revenues as well as loss of deficit financing sources – proceeds from privatization, loans and budgetary credits repayments. The deficit in 2015 is expected to amount to RUB 2.76 trillion (3.8% of GDP) against the RUB 431 billion earlier in autumn (0.6%), and in 2016 – RUB 994 billion (1.2%), compared to the RUB 476 billion earlier projected (0.6% ).
The calculations are based on an average oil price of $50 a barrel this year and $65 in 2016. In 2017, provided the oil prices resume growth to $70 a barrel, the Reserve Fund will be able to replenish its reserves by around RUB 111 billion, up to RUB 600 billion, the Finance Ministry estimates.
The Ministry of Finance is expected to present its new budget projections to the Russian government on Wednesday. In view of the twofold decrease in projected oil prices, economic recession and financial sanctions imposed against Russia, at least RUB 3.1 trillion may have to be taken from the Reserve Fund, according to the Finance Ministry.
Three-quarters of the amount (RUB 2.3 trillion) will be used to compensate for the shortfall of budget revenues, with the rest used to cover the lack of deficit financing sources. Budget income in comparison with the budget law adopted in autumn last year will be RUB 2.6 trillion less, or 17.2%, at RUB 12.45 trillion. Expenditures will be reduced by only 1.9% - or RUB 298 billion rubles - despite the 10% cutbacks announced by the Russian government.