Reserve Fund will not be used up in 2017 contrary to expectations - Medvedev
MOSCOW. April 19 (Interfax) - Russia will not use up its Reserve Fund in 2017 contrary to expectations thanks to additional budget revenue, Russian Prime Minister Dmitry Medvedev said.
"We are succeeding in keeping the budget deficit at a reasonable level. The main source to cover the deficit is the Reserve Fund, whose funds were theoretically supposed to dry up already at the end of this year. But this will not happen," Medvedev said, delivering a report in the State Duma.
"We made more money than expected, including by mobilizing revenue. And we still have a lot of reserves. We are setting up the system for all budgetary payments in a way to be as efficient as possible," he said.
Medvedev said that "not so long ago our budget, including Reserve Fund spending, was more than two-thirds dependent on oil and gas sales. Now the situation has changed. Budget revenue from other sectors makes up more than half." In Q1 2017, non-oil and gas revenue totaled almost 60% of all federal budget funds, he said.
The 2017 budget projects that the Reserve Fund will run out of money this year. However, Finance Minister Anton Siluanov said earlier this year that might be avoided if the price of oil remains at the level $50 per barrel.
Beginning on February 7, the Finance Ministry began FX purchasing on the domestic market using windfall oil and gas revenue resulting from an oil price above the $40 per barrel assumed in the budget. The FX will be held in Federal Treasury accounts. Siluanov said this was the precursor to an updated budget rule. At the same time, money from the Reserve Fund may be used to finance budget spending as needed. In other words, Reserve Fund money may be spent at the same time FX is being purchased, Siluanov said. However, at the end of the year, the FX balance will be transferred to the Reserve Fund.
"This year, the budget envisages that the funds will be tapped - the Reserve Fund and National Welfare Fund - for 1.8 trillion rubles. The Reserve Fund contained about 970 billion rubles on January 1 and roughly 900 billion rubles were left to spend from NWF money. Will we be able to preserve the Reserve Fund if oil stays at $50 to the barrel? Yes we will, because the windfall might be around 1 trillion rubles," Siluanov said in January.
Economic Development Minister Maxim Oreshkin later estimated the oil and gas windfall in 2017 at $13 billion (about 740 billion rubles).