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Oil prices of 70$ per barrel not to have adverse impact on Russian budget - Ulyukayev

November 29, 2014, 0:26 UTC+3
He said, falling oil prices and rouble devaluation will be a reason to revise economic growth forecasts to somewhat downgrade them
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© Pavel Smertin/TASS

MOSCOW, November 28. /TASS/. Oil prices at about 70 U.S. dollars per barrel will have no adverse impact on Russia’s budget, Russian Minister of Economic Development Alexey Ulyukayev said in an interview with Russia’s television Channel One on Friday.

He said a decline in the rouble’s exchange rate had mitigated impacts of plunging oil prices on the country’s budget. “For us as a spending unit, for the budgetary system, the rouble-denominated oil price is much more important than the dollar component,” he said.

According to Ulyukayev, when the oil price was 110 U.S. dollars per barrel and the rouble exchange rate was 32-33 roubles per one U.S. dollar, the rouble-denominated oil price was about 3,600 roubles. “Its price in roubles is about the same now, when the oil price is 71-72 U.S. dollars per barrel and the rouble exchange rate is 49-50 roubles per dollar - the same 3,600 roubles. It means that the budget will be good and we will even have a minor surplus. And the financial system in general will be rather comfortable,” he said.

“So, the combinations of the budget structure, the combinations of the monetary policy of the Central Bank, the availability of reserve funds give us a huge margin of safety to fulfil budgetary obligations,” the minister stressed.

However he admitted that growing dollar rates would be an additional pressure on market participants and households that have considerable share of spending in foreign currency. “But those who compete with imported commodity, those who receive incomes in roubles and make spending in roubles will have extra advantages,” he noted.

Nonetheless, he said, falling oil prices and rouble devaluation will be a reason to revise economic growth forecasts to somewhat downgrade them. “But these adjustments will be within tenth of GDP percent,” he noted.

At the same time, the minister stressed that the government was committed to fulfill all of its social liabilities. “I think they will be completely fulfilled. We have a mechanism of indexing - it concerns pensioners, it concerns budget-paid employees. It will be activated for pensioners in February 2015,” he added.

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