Russia Needs to Readjust Budget for Next Years to Reflect Lower Oil Prices

MOSCOW, November 26 (Sputnik) — Russia will need to readjust its federal budget for the next few years to reflect oil prices of $80 to $90 per barrel, Russian Finance Minister Anton Siluanov said Wednesday.

“Our budget and economic plans need to be configured based on new macroeconomic events, which in our view won’t change soon. The new price for oil of $80-90 [per barrel] will most likely remain for the long haul,” Siluanov said during a Federation Council session. "Therefore, when planning the budget for the new budget cycles, we need to base it on the oil price forecast that we expect."

"We, of course, have risks for the next year, and first of all this is the price for oil. If this situation continues with the ruble's exchange rate and oil prices like today, then we will lose around 500 billion rubles [$10.7 billion] in revenue," Siluanov stated.

The minister has also pointed out that Russia's budget is at risk "in the slowing of economic growth," those risks may account for another $10.7 billion in losses.

In early October, Central Bank first deputy chair Ksenia Yudayeva said the Russian financial regulator was working on a shock scenario for financial policy in the case of a plunge in oil prices. There were three options in the scenario, with the toughest of them suggesting an action plan should prices fall to $60 per barrel.

Nevertheless, this idea was dumped, as the Russian Central Bank did not believe the oil prices could fall below $80 per barrel up to 2017.

In recent months Russia's economy has been exhibiting signs of a minor slowdown due to geopolitical tensions and a drop in oil prices, which was caused by an excess of oil supply by OPEC.

Russian Economic Development Minister Alexei Ulyukayev said, however, that he does not believe in such a dramatic price decline. The Russian Finance Ministry said that it expects global oil prices to stabilize at $90 per barrel in the medium-term, although there could be a short-term fall in 2015.