TEHRAN (Iran News) – Budget deficit in Russia could reach 0.9% of gross domestic product (GDP) in 2020 at current oil prices, Finance Minister, Anton Siluanov told the upper house of parliament on Saturday.
The country’s economy has been hit by a slump in global oil prices and the spread of the coronavirus, with the minister saying the latter was having the bigger effect as it complicated transportation, tourism, and trade, Reuters reported.
Russia previously expected a 2020 budget surplus of 0.8% of GDP, but budget revenues from oil and gas at current prices are set to decline by about 2 trillion roubles ($27.7 billion) compared with previous estimates, Siluanov said.
“With the current prices for energy resources, we will have a deficit of up to 1% of GDP. We estimate that it will be at 0.9% of GDP,” the minister said, adding that all budget obligations would be met.
Russia has a rainy-day National Wealth Fund (NWF) made up of oil revenues accumulated in previous years. It is part of Russia’s sovereign reserves and held 8.2 trillion roubles ($113.5 billion), or 7.3% of the country’s GDP, as of March 1.
The country will spend 600 billion roubles from this fund in 2020, including on a previously disclosed state plan to purchase a 50% + 1 share in Sberbank, the country’s largest lender, from the central bank.
Siluanov added that the finance ministry expects oil companies to add 500 billion roubles to the fund this year.
Oil prices have halved since the start of the year because demand has been hit by the coronavirus outbreak and after Russia and OPEC failed to reach a new deal on supply cuts.
Russia refused to support new deeper cuts and Saudi Arabia retaliated by opening its taps and pledging to pump record volumes on to the market.
Saudi Arabia’s national shipping firm, Bahri, has provisionally chartered up to 31 supertankers, up from 19 vessels sought earlier this week, in a sign that the kingdom is looking to flood world markets with crude oil.
Each of these vessels, known as very large crude carriers, can carry a maximum of 2 million barrels of oil.
Top oil exporter Saudi Arabia had said on Wednesday it would launch a program to boost production capacity for the first time in more than a decade, signaling to Russia and other rivals it was ready for a long battle over production levels and market share.
- source : Iran Daily, Irannews