26 Dec 2017 16:35

MinFin may buy 2 trln rubles in FX in 2018 at $54-$55 oil, 2.8 trln rubles at $60

MOSCOW. Dec 26 (Interfax) - The Russian Finance Ministry could spend around 2 trillion rubles to buy forex on the domestic market in 2018 with average oil prices of $54-$55 per barrel; should the price be $60 per barrel, this amount could rise to 2.8 trillion rubles, Finance Minister Anton Siluanov told journalists.

"There are estimates. We budgeted for $40 per barrel, all differences between $40 and the actual price next year will go towards reducing National Welfare Fund expenses, more specifically, on balance reduction, as we will spend and accrue like this year. So net reserves spending on this amount will be lower [...] With oil prices at $54-$55 around 2 trillion rubles will come in as additional oil and gas income. This will even cover those reserve expenditures that we have provided for next year. And if $60 per barrel, then somewhere around 2.8 trillion rubles," he said.

The new fiscal rule formula means the Finance Ministry buys more forex than before. "We are indeed taking up to 70% of all oil and gas revenue in the framework of the fiscal rule and putting it into our reserves, but until lately it was lower, around 30%-40%," Siluanov said.

He said the ruble's exchange rate was less and less exposed to oil prices because more use was being made of the fiscal rule.

"Even if there's volatility in the market for crude oil or the capital markets, this will be reflected less in the exchange rate than under previous methods to determine how much goes into the National Welfare Fund," he said.

"If oil stays as it is, if only $55 to the barrel, then the exchange rate will probably stay the same too, if there aren't any further sanctions, any more trouble from external restrictions," he said.