Russian Budget to be Revised if Oil Continues to Weaken

Tumbling oil prices could force Russia to revise its 2016 budget, Prime Minister Dmitry Medvedev has warned.

He said that the country must be prepared for a “worst-case” economic scenario if the price continued to fall.

Oil was trading at less than $32 a barrel on Wednesday and has fallen by 70% in the past 15 months.

Taxes from oil and gas generates about half the Russian government’s revenue.

The 2016 federal budget that was approved in October was based on an oil price of $50 a barrel in 2016 – a figure President Vladimir Putin has since described as “unrealistic”.

Government departments have been ordered to cut spending by 10%, repeating a policy imposed in 2015, Reuters reported.

Pensions and pay for government workers will be protected from the cuts, which could save as much as 700bn roubles (£6.3bn; $9.1bn).
Finance minister Anton Siluanov said that the Russian budget could only be balanced at an oil price of $82 a barrel.

via BBC

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza