The Russian Finance Ministry on Thursday announced a new measure it said was aimed at shielding the state budget from oil price fluctuations and Western sanctions targeting Russian energy exports.
Under the new initiative, set to be implemented next year, the government will lower the cut-off price for oil above which oil revenues go into the fiscal reserve fund to try to ensure that the fund is sufficiently replenished.
"To make our finances more resilient, we are proposing a reduction in dependence on various constraints, whether price-related or volume-related, in the budget’s reliance on oil and gas revenues," Finance Minister Anton Siluanov said at a public forum.
The new measure is a win for Siluanov who sought to restore the mechanism, called the "budget rule", after it was abandoned after the start of the war in Ukraine, although Russian media reported that he had pushed for a bigger reduction.
If the rule is not in place, windfall energy revenues are used to cover regular expenditure, making the budget more vulnerable when the oil price is going down.
Siluanov said the cut-off price would be lowered by $1 every year to bring it to $55 per barrel in 2030. The cut-off price is currently at $60 per barrel. The draft budget is expected to be submitted to parliament on September 29.
The fiscal reserve fund, which can be used to cover the budget deficit, currently has about 4 trillion roubles ($48.25 billion) in it. The government this year plans to tap the fund for 447 billion roubles ($5.39 billion) to cover part of the budget deficit, which is expected to exceed 1.7% of GDP.
Siluanov said that the new measure will help to bring the share of energy revenues in the state budget down to 22% from about 25% in the first eight months of 2025.
($1 = 82.9000 roubles)
