MOSCOW (Reuters) -The Russian government plans to tap its fiscal reserves for 447 billion roubles ($5.51 billion), or 14% of their remaining liquid assets, to balance the budget in 2025 after a threefold increase in the deficit, the finance minister said on Tuesday.
The finance ministry raised the 2025 budget deficit estimate to 1.7% of gross domestic product (GDP) last week from 0.5% after reducing the energy revenues forecast by 24% due to expectations of a prolonged period of low oil prices.
The move, taken as global oil prices hit their lowest level in four years, reversed the initial ministry’s plan to replenish the reserve National Wealth Fund (NWF) this year and forced it to look for sources to cover the deficit instead.
“Overall for the year based on forecast data from the Ministry of Economy, which we used as a basis for the federal budget adjustment, we expect to use 447 billion roubles from the National Wealth Fund,” Anton Siluanov, the minister, told a news conference.
Siluanov said the government was not planning any emergency measures such as raising taxes or cutting spending this year. Neither the ministry is planning to increase its borrowing plans.
“This year, I hope we will manage without taking extraordinary measures during the budget execution process,” Siluanov said.
Seeking ways to counter the oil price shock, Siluanov proposed to save more oil revenues by lowering the so-called “cut-off” price of oil, above which all energy revenues are set aside for a rainy day, in the next three-year draft budget.
The initiative would have ensured at least a three-year coverage of budget spending if the oil price remains low for an extended period but also implied a reduction in spending as the military operation in Ukraine continues.
Siluanov’s comments on Tuesday suggested the idea was shelved for the time being.
“In the projections for the next three-year budget, a change in the cut-off price will not be provided for,” he said.
($1 = 81.1455 roubles)
(Reporting by Gleb Bryanski and Darya KorsunskayaEditing by Andrew Osborn)
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