Russia may miss 3 trillion rubles of oil revenues in 2020
US, WASHINGTON (ORDO NEWS) — In 2020, the federal budget of the Russian Federation will lose almost 3 trillion rubles of oil and gas revenues at current oil prices that fell below $ 30 per barrel due to the coronavirus pandemic and after the collapse of the OPEC + deal.
“(Because of the coronavirus), entire sectors of the economy are shrinking, shrinking — transportation, tourism, and small business. This is followed by an increasing number of other sectors, and purchases of expensive commodities, including cars, are declining. Unfortunately, the situation is not developing in the best way so far and accordingly we are deviating from the macroeconomic forecasts that we have formulated for the current year, ”Finance Minister Anton Siluanov told a Treasury board on Wednesday.
“Of course, this will affect the budget. We made estimates – only the oil factor at current prices of almost 3 trillion rubles reduces the volume of oil and gas revenues compared to planned assignments. Of course, this year we will switch to a deficit budget, we will have to use the resources of our reserve.”
Last week, Siluanov estimated budget losses in 2020 from a decrease in oil prices at 2.0 trillion rubles, and the deficit at 0.9% of GDP. The Ministry of Finance announced that it plans to spend 600 billion rubles from the National Welfare Fund (NWF) this year to cover a budget hole.
The Ministry of Finance made up the 2020 budget with a surplus of 876.1 billion rubles, or 0.8% of GDP. The ministry formed a budget based on a forecast of oil prices of $ 57 per barrel and an average annual rate of 65.7 p / $ 1. At the beginning of the year, the authorities specified oil and exchange rate forecasts – $ 57.7 per barrel and 63.9 p / $ 1 respectively, the budget surplus was estimated at 927.6 billion rubles, 0.8% of GDP.
Amid the coronavirus pandemic and the plans of oil-producing countries to increase production, prices for black gold fell below $ 30 per barrel, losing about 17% this week.
The ruble on Wednesday was cheaper at 78 p / $ and 86 p / euro for the first time in four years.
In the first two months, the federal budget was executed with a deficit of 272.2 billion rubles, or 1.7% of GDP.
Fortune telling on the oil
A drop in oil prices will have a significant, but not critical effect on budget execution this year, Gazprombank analysts say.
According to their estimates, while maintaining oil prices at $ 30 per barrel until the end of the year and an average rate of 75.0 r / $ 1, the amount of oil and gas revenue lost will amount to 2.0 trillion rubles, the budget deficit will reach 800 billion rubles, or 0.9% of GDP.
At the same time, the damper mechanism, which allows counting on additional revenues from oil companies when prices fall, will support the budget. According to analysts of Gazprombank, while maintaining oil quotes at the level of $ 30, companies will transfer about 700 billion rubles to the treasury. Without damper, the budget deficit would have amounted to 1.4 trillion rubles, analysts calculated.
Thanks to the damper, the Ministry of Finance will sell less currency in the market under the budget rule, and will be able to cover the “hole” through internal borrowing, funds of the National Wealth Fund, and, if necessary, can use funds in accounts with the CBR in the amount of 1.1 trillion rubles and in the banking system (deposits, repurchase agreements) – 1.6 trillion rubles, Gazprombank analysts write.
According to analysts at Raiffeisenbank, the budget deficit, depending on oil prices, will reach 1.5-3.0 trillion rubles.
“In the coming months, the budget will suffer due to a reduction in revenues, while the volume of unforeseen expenses associated with anti-crisis measures, so far, apparently remains at a relatively low level,” they write.
“As we understand it, it’s quite difficult for the authorities to predict how strong the economy and budget revenues will fall, but it is clear that the effect will be very serious, so it’s likely that after elaboration, the government will initiate new measures that will require more substantial expenses,” analysts expect Raiffeisenbank.
The head of the Accounts Chamber, former Finance Minister Alexei Kudrin, estimated the budget deficit this year at 2.0% of GDP at an oil price of $ 35 per barrel.
The volume of the NWF at the beginning of March amounted to 8.25 trillion rubles, or 7.3% of GDP, which is equivalent to $ 123.1 billion, the Ministry of Finance reported.
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