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How many years is enough of NWF in the case of low oil prices

На сколько лет хватит ФНБ в случае низких цен на нефть

The national welfare Fund will be enough to fulfil budgetary obligations in terms of low prices for several years. This was stated at the parliamentary hearings in the Federation Council the first Deputy Prime Minister — Minister of Finance Anton Siluanov.

“Today we have all possibilities to execute the budget, to fulfill our commitments when oil prices 30 per barrel and below. We have enough reserve in order to pass three or four years in terms of low prices,” he said.

“The mechanism of budget rules to prevent the occurrence of risks that we have faced that we, in fact, a few times stepping on the same rake, and each time got the obvious result. Now we have created a safety system,” — added Siluanov.

Next year will be an opportunity not only to accumulate reserves but also to carry out investment from this source, continued Siluanov. “Were really difficult years, we have created the conditions to safely pass and deal with a variety of external influences, on the one hand. On the other hand, we already have the ability to invest our reserve,” he said.

Siluanov said that after exceeding the NWF 7% of GDP will be able to invest about 1.7 trillion rubles. He noted that about 15-20% could be spent on investment projects within the Russian Federation, including regional.

In turn, the Ministry of Finance has estimated the anticipated consequences for the country from possible shocks on the world commodity markets. The Ministry of Finance considered the most extreme case – if the Russian oil of Urals oil drops to 10 dollars per barrel and remain at this level for 10 years.

In this case, Russia will receive less revenue from the sale of energy in excess of 70% of annual GDP. At the end of last 2018 the size of Russia’s GDP reached 103 trillion. In the calculations of the Ministry of Finance noted that the year when the oil prices fall to the lowest possible figures — $ 10 per barrel, the Treasury will lose about 5% of GDP as revenue from the sale of energy.

However, experts believe that the scenario with the fall in oil prices, even up to 40 unlikely. According to them, the amount of the accumulated safety cushion and stability of Finance of Russia in General will allow the economy to undergo a period of low hydrocarbon prices without strong shocks.

Moreover, in the context of the internal and external economic instability, Russia has adopted a conservative fiscal policy and has a balanced budget in 2019 even if the price of Urals in 49,20 USD per barrel. A budget specialist in the Economic expert group Alexander Suslin noted in an interview with Bloomberg that this is the lowest price over the last ten years.

In turn, a strategist at Danske Bank Vladimir miklashevskii notes that President Vladimir Putin considers the impact of sanctions on Russia and weak economic growth, and therefore maintains a strict financial policy. Russia does not need that oil prices were too high and she said the price of Brent at $ 60, “satisfactory”, said the head of state in early June.

“The Russian processing industry itself is not interested in very high oil prices. We don’t need to raise the price, we already have a decent margin from the point of view of the budget”, – said Putin.

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