18 Mar 2020 12:54

Situation thus far not developing in best way, Russia to see budget deficit in 2020 - Siluanov

MOSCOW. March 18 (Interfax) - The Russian government is diverting from its macroeconomic forecast for 2020: the budget will see a deficit and National Wealth Fund (NWF) resources will need to be used, Finance Minister Anton Siluanov said while speaking at the annual meeting of the Federal Treasury board.

Opening the board meeting, Siluanov remarked on the fact that it was being held in an unusual online format due to restrictions associated with coronavirus. "This is better than cancelling it entirely. Even if this format is limited, somewhat truncated, but we can very well hear each other online and have discussion of the matters that worry us," Siluanov said, after being forced to cancel the Finance Ministry's annual board meeting.

"We have recently run into a difficult situation for Russia, with falling prices for energy commodities, which has always been one of the principal risk factors for our economy. Now an even more serious problem has arisen - the coronavirus. It's not even so much the virus - whole sectors of the economy are contracting. We've already talked about sectors such as shipping, including air travel, tourism, small business, these are progressively followed by a whole host of other sectors. Purchases of expensive consumer goods are down, including cars. So the situation thus far is not developing in the best way," the minister said.

"As such, we are diverting from the macroeconomic forecast which we drew up for the current year. This will certainly affect the budget; we have made estimates - the oil factor alone at current price reduces budget revenues by virtually 3 trillion rubles compared with planned figures. I will recall that the overall volume of the federal budget is around 20 trillion rubles. As such, we will certainly transition to a budget deficit this year, and we will have to use funds from the NWF. As a matter of fact, this is what it was formed for," Siluanov said.

Amendments to the 2020 budget adopted by the State Duma and Federation Council last week envisage a surplus of 927.6 billion rubles or 0.8% of GDP. However, another revision of the budget law is planned during the State Duma's spring session.

Resources should be focused on effective pinpoint support of sectors of the economy, regions and small business, the minister said. "Of all this vectors that simply cannot exist without state support," Siluanov said.