Russian Finance Ministry planning reduction of cut-off price in budget rule by $1 per year to $55/bbl by 2030
MOSCOW. Sept 18 (Interfax) - The Finance Ministry is incorporating a gradual reduction of the oil cut-off price in the budget rule from $60 per barrel to $55 per barrel by 2030 while preparing the draft federal budget for 2026 and the planning period of 2027-2028.
"In order to make finances sustainable, we propose and are building into the budget a reduction in dependence - you mentioned oil - on various restrictions, be they price or volume-related, of the budget on oil and gas revenues. And while preparing the budget, we plan to lower our budgetary benchmark, which is the basis for forming oil and gas revenues. If you recall, today it is $60 per barrel. By 2030, we plan for $55, reducing the budget's dependence on oil and gas by one dollar each year," Finance Minister Anton Siluanov said at the Moscow Financial Forum.
The share of oil and gas revenues in the budget, which previously accounted for around 50%, will already be 22% next year, he said.
"Therefore, it seems to me that the sustainability of the budget equals the sustainability of finances, the sustainability of finances equals the fundamental basis for economic growth and the growth of people's welfare," he said.
"We are saying that we must make the budget more muscular, one that would respond to any restrictions we face," he said.
According to the minister, this essentially represents a return to the principles that were laid down in 2017 when preparing the budget rule. "The price was $40 per barrel, as the cut-off for forming revenues going to expenditures. This price was indexed by 2% [annually]. We slightly eased it during the period of all the covid [outbreaks] and sanctions. If we had maintained that dynamic, we would have gotten approximately $55 by 2030. Therefore, we are consciously moving towards having a budget that is protected from external influences," he said.
Siluanov previously said that the issue of changing the oil cut-off price under the budget rule would need to be considered when preparing the budget for 2026-2028.
"We need to think, perhaps when preparing the new budget for the medium term, to look at the level of the cut-off price, the base price, $60 per barrel, how well it corresponds today to the levels that allow us to ensure not only the preservation but also the replenishment of the National Welfare Fund," he said at the time.
In addition, when forming the draft budget for 2026, the Finance Ministry is taking into account a forecasted average price for Urals oil of $59 per barrel, he said.
"We understand that today $60 per barrel is a price that may be too optimistic for the oil price, because we have seen that prices for Urals oil fall below this cut-off. Today the geopolitical situation has changed, but we must always keep the budget 'dry,' always keep the budget in good shape. So this issue is not simple, we will discuss this issue in the government, I would say so," Siluanov said.
