Russia 2010 budget based on $50/bbl oil: report
Russian President Dmitry Medvedev tasked his sway on Monday with working out a national budget for next three years based on a worst case scenario of the global financial crisis continuing into 2010.
"In 2009 we expect a deeper slowdown in juxtaposition to our forecasts," Medvedev said presenting his budget address to the management. "The budget deficit will be at least 7 percent of GDP, which is still an bright assessment.
Gross domestic product shrank 9.5 percent in the first quarter, year-on-year, and the 2009 budget is based on an economic contraction of just 2.2 percent for the year.
Medvedev, flanked by his powerful Prime Minister Vladimir Putin, said the 2010-2012 budget should be based on a "conservative" assessment of the price of oil, the main source of revenues.
"The regulation prefers to use the tory scenario, which according to our forecasts is $50 in 2010, $52 in 2011 and $53 in 2012," Finance Minister Alexei Kudrin told reporters after the Kremlin meeting.
The 2009 budget is based on $41 oil, while Russia's Urals oil export blend is currently trading at $58.6 a barrel.
"There are some bright forecasts that there will be some growth next year, but this in no way changes our priorities in the budget process," Kudrin said.
Kudrin said Russia's Reserve Fund will be used to fund the budget deficit this year and next, but could start to be replenished again in 2011 if oil prices were higher than $50 per barrel.
Kudrin confirmed the government's plan to reduce the budget deficit to 5 percent in 2010 and further to 3 percent in 2011, but said the task could only be achieved if the whole system of budget spending was reviewed.
"A review of spending, a change to targeted spending and saving -- these are the key words in the next three years," he said.
Kudrin said a fair balance between keeping an austere financial course and avoiding an economic shock was still to be found.
"This year we expect inflation of around 13 percent," he said. "But there are some good reserves to reduce it to 10 percent next year, or perhaps even lower than that."
"In 2009 we expect a deeper slowdown in juxtaposition to our forecasts," Medvedev said presenting his budget address to the management. "The budget deficit will be at least 7 percent of GDP, which is still an bright assessment.
Gross domestic product shrank 9.5 percent in the first quarter, year-on-year, and the 2009 budget is based on an economic contraction of just 2.2 percent for the year.
Medvedev, flanked by his powerful Prime Minister Vladimir Putin, said the 2010-2012 budget should be based on a "conservative" assessment of the price of oil, the main source of revenues.
"The regulation prefers to use the tory scenario, which according to our forecasts is $50 in 2010, $52 in 2011 and $53 in 2012," Finance Minister Alexei Kudrin told reporters after the Kremlin meeting.
The 2009 budget is based on $41 oil, while Russia's Urals oil export blend is currently trading at $58.6 a barrel.
"There are some bright forecasts that there will be some growth next year, but this in no way changes our priorities in the budget process," Kudrin said.
Kudrin said Russia's Reserve Fund will be used to fund the budget deficit this year and next, but could start to be replenished again in 2011 if oil prices were higher than $50 per barrel.
Kudrin confirmed the government's plan to reduce the budget deficit to 5 percent in 2010 and further to 3 percent in 2011, but said the task could only be achieved if the whole system of budget spending was reviewed.
"A review of spending, a change to targeted spending and saving -- these are the key words in the next three years," he said.
Kudrin said a fair balance between keeping an austere financial course and avoiding an economic shock was still to be found.
"This year we expect inflation of around 13 percent," he said. "But there are some good reserves to reduce it to 10 percent next year, or perhaps even lower than that."
