Russia to Withstand OPEC Decision, Focus on Import Substitution: Deputy PM

MOSCOW, November 29 (Sputnik) — First Deputy Prime Minister Igor Shuvalov noted on Saturday that the government will pull through despite OPEC’s decision not to reduce output, and identified a number of priorities for the government, including tackling inflation and pushing through efforts to increase import substitution, Russian media have reported.

Shuvalov told Rossiya 1’s ‘News on Saturday’ program that the OPEC decision was not entirely a surprise for the government, noting that events, including the ruble’s reaction to the announcement, “were calculable.” Moreover, “we understand how to respond,” he said.

Addressing falling prices in relation to figures projected in the country’s budget, approved last week by the Duma, Shuvalov said that “indeed, we had considered a price-per-barrel rate of $96…But the new rules for determining the value of the currency basket do not have any impact on the revenue side of the budget, since even though the rate is changing and the ruble becomes cheaper, the fulfillment of the budget remains unchanged. All the commitments which exist in the federal budget will be fulfilled in full.”

Shuvalov’s remarks echoed those made by Economic Development Minister Alexei Ulyukaev last week, when the latter noted that falling energy prices would be partially compensated by the weaker ruble, given that Russian oil revenues are paid for in dollars. Ulyukaev also noted on Friday that his ministry may revise GDP growth projections slightly in response to the continuing decline in energy prices.

The deputy prime minister noted that the two issues at the top of the government’s current list of priorities remain inflation and import substitution. Both the government and the country’s Central Bank still have plans on achieving an inflation rate of four percent in the medium term, he noted.

On import substitution, Shuvalov noted that “a great deal will depend on the leaders of [the country’s] regions,” but “if we work together cohesively…we will be able to quickly solve the issue of import substitution. And then we will no longer face any problems associated with changes in the value of the national currency, or in the falling price of oil, because products that are produced in Russia will not depend on external market fluctuations. The country must learn how to produce and consume domestically produced goods,” he said, as quoted by Rossiyskaya Gazeta.

The Deputy Premier also noted that the government must be careful about spending its Reserve Fund. “If energy prices will continue to fall, and if suddenly the revenue stream of the federal budget could not be replenished, we will use the Reserve Fund, in accordance with the law. But the position of the president, which the government strictly follows, is that these reserves cannot be spent haphazardly; reserves must be spent only as a last resort and only for the aim of the modernization of the economy and the maintenance of fiscal stability,” Rosbalt quoted him as saying.