MinFin to defend position on 7% Reserve Fund level - Siluanov
MOSCOW. Oct 19 (Interfax) - The Russian Finance Ministry is categorically against lowering the Reserve Fund's statutory amount and will insist this remain at 7% of GDP, Finance Minister Anton Siluanov told reporters following a discussion of the draft 2013 budget and budget for the planned period 2014-2015.
"We'll categorically object to any reduction," Siluanov said, adding that the government had introduced a bill to the State Duma, stating that the Reserve Fund's statutory amount would be 7% of GDP.
"This stays in force," he said.
Some Duma deputies have spoken against lowering the statutory limit.
"They'd rather get money that hasn't been earned the quicker and spend it without worrying about the sustainability of spending obligations," he said.
Russia risks a reduction of its losing its competitiveness and investment ratings if the Reserve Fund if spent. "The rating agencies say the budget is highly dependent on oil," he said, adding that channeling oil and gas revenue into the Reserve Fund was the way to mitigate that risk.
The non-oil deficit is currently 10.7% of GDP and is projected to fall to 9.7% in 2013, 8.7% in 2014 and 8.4% in 2015.
The budget was drafted with a budget rule, which determines the benchmark price of oil and level of spending based on that.
"With the macroeconomic forecast that includes an oil price of $97 a barrel in 2013, we budgeted for $91 a barrel," Siluanov said.
He said the adoption of the budget rule mitigated budgetary risks, including the risk that spending would be cut or targets missed.
"We consider the budget rule gives grounds for a conservative revenue and spending forecast for a budget that can withstand any turbulence in the global economy," he said.
Siluanov said the 2012 budget would be balanced at $111.2 a barrel of oil and the 2013 budget at $105.1, and less by 2015. Prior to the crisis the budget had been balanced at $25-$30 a barrel, he said.
"So today we depend on oil and gas revenue to a greater extent," he said.
All oil and gas producing nations keep their oil and gas revenue in special funds, Siluanov said. Those reserves are as high as 130% of GDP in Norway, 162% in the UAE and 80% in Saudi Arabia, while in Russia, the National Welfare Fund and Reserve Fund combined are only around 7% of GDP (16% pre-crisis). Siluanov said that to that end, Russia needed to continue to put money aside.
Sergei Stepashin, head of the Russian Audit Chamber, said there were risks attached to the budget rule. "The Finance Ministry estimates the Reserve Fund will have to be topped at 7% of GDP until 2017 at least. That would be justified if the external situation were to deteriorate abruptly. Otherwise, saving money like that could prove excessive," Stepashin said.